Private Activity Bond Program

Private Activity Bond Program

Offers Iowa borrowers access to tax-exempt financing via private activity bonds for public-benefit oriented projects.

Iowa's Private Activity Bond (PAB) Program enables the Iowa Finance Authority (IFA) — a sister authority to IEDA — to issue tax-exempt bonds on behalf of private entities for projects that serve a public interest while benefiting private operations. Bond proceeds allow eligible borrowers to access tax-exempt financing, reducing their cost of capital relative to conventional taxable debt. The bonds carry no liability to IFA or the State of Iowa; they are repaid entirely from revenues generated by the private project.

Eligible project types under federal IRS qualified private activity bond rules include privately-owned solid waste disposal facilities, affordable multifamily residential rental housing, industrial revenue bonds for manufacturing facilities, and projects of 501(c)(3) private nonprofit corporations. Bond amounts vary by project with no published minimum or maximum. IFA charges a tiered issuance fee: 0.10% on the first $10 million, 0.05% on the next $10 million, 0.0375% on the next $30 million, and 0.01875% above $50 million, with a maximum fee of $75,000. An initial application fee of $1,000 applies for bonds up to $10 million, and $2,500 for bonds over $10 million.

Applications must be received approximately 10 days before monthly IFA Board meetings and expire if bonds are not issued within 18 months of approval. The primary applicant contacts for the program are the Private Activity Bond Team at bonds@iowafinance.com or 515.452.0461. Applicants must demonstrate compliance with IRS regulations governing qualified private activity bonds, making legal counsel familiar with tax-exempt finance a practical prerequisite for applicants.