Bonds issued by government agencies are called municipal bonds. The proceeds of the bonds are used to finance projects that benefit the community such as roads, schools, bridges, sewers, parks or water treatment. Most bonds issued by government agencies are tax-exempt. This means interest on these bonds are excluded from gross income for federal tax purposes. In addition, interest on the bonds is exempt from State of California personal income taxes.
Who is a conduit bond issuer?
As a conduit issuer, IBank does not underwrite the bonds in house. IBank issues bonds on behalf of a borrower and then lends those proceeds to that borrower. The bonds are special, limited obligations payable solely by the borrower’s payments. The borrower provides security to the bondholder and agrees to repay the bonds.
501(c)(3) Bonds
Tax-exempt financing to eligible nonprofit public benefit corporations for the acquisition and/or improvement of facilities and capital assets. Qualified 501(c)(3) bonds are tax-exempt qualified private activity bonds issued by a state or local government, the proceeds of which are used by a 501 (c)(3) organization to continue their mission and exempt purpose.
Eligible 501(c)(3) Bond Applicants
Typical examples of nonprofit corporations include cultural facilities such as museums, libraries, aquariums, and historic preservation; educational facilities such as universities, colleges and schools; charitable organizations and foundations; recreational facilities such as community centers, local sports facilities and YMCAs; research institutes and centers; organizations that promote social benefits such as the prevention of cruelty to children and animals.
Eligible 501(c)(3) Projects
Capital expenditures, refunding prior debt (under certain circ*mstances), reimbursing prior expenditures (under certain conditions), (limited) working capital, costs of issuance, capitalized interest and debt service reserve funds.
