© 2009, Ice Miller LLP
Impact	Change	Guidelines Under Stimulus Package	Contact
Municipal Finance	Read a brief article discussing the impact on municipal finance.		James Snyder - james.snyder@icemiller.com and Philip Genetos - philip.genetos@icemiller.com
Bank Qualified Bonds-Interest Expense Deduction	Bonds issued in 2009 and 2010	Issuers may issue up to $30 million in bank qualified bonds (prior limit was $10 million.)  The Stimulus Bill deems the 501(c)(3) borrower as the issuer for purposes of determining the $30 million threshold.  Private activity bonds and governmental bonds are eligible to be counted as bank qualified under new de minimus rule.  Refunding opportunities exist with respect to many governmental or Section 501(c)(3) obligations not originally issued bank qualified.
Alternative Minimum Tax	Tax-exempt interest.	Interest earned on tax-exempt private activity bonds is no longer an item of tax preference. The interest on any tax-exempt bond is not included in adjusted gross earnings in determining minimum taxable income of corporations.  Refunding opportunities exist with respect to tax-exempt private activity bonds issued between 2004 and 2008.
Manufacturing Bonds	Financing manufacturing facilities	For new bonds issued, the requirements regarding the percentage of proceeds (currently 25%) that can be used for facilities have been relaxed so that the restrictions no longer apply to manufacturing facilities that are functionally related and subordinate to the manufacturing facility or located at the same site.  The definition of manufacturing facilities is also expanded to include facilities used in the production of intangible property, such as patents, copyrights, formulas or similar items.
Build America Bonds	A new type of bond for state and local governments	State and local governments may elect to issue these bonds in lieu of tax-exempt government bonds.  Under the program, bondholders would receive a credit tax equal to 35% of the taxable interest, or issuers may elect to receive such credit.  The bonds must be issued prior to January 1, 2011.
Recovery Zone Economic Development Bonds	A new type of bond for recovery zones	These bonds may be issued for the purposes of capital expenditures for public infrastructure, constructing of public facilities and expenditures for job training and educational programs in areas defined by state and local governments as having significant poverty, unemployment, home-foreclosure rates or general distress.  Under the Recovery Zone Economic Development Bonds program, the federal government will provide issuers with an advance tax credit equal to 45% of the taxable interest on the bonds.  The bonds have a national limitation of $10 billion to be allocated among states and within states on the basis of 2008 employment decline.  These bonds must be issued prior to January 1, 2011.
Recovery Zone Facility Tax-Exempt Bonds	A new type of bond for facility financing in recovery zones	These bonds must be used (95% or more of the net proceeds) to construct, reconstruct, renovate, or acquire moot projects.  All property must be in the recovery zone to qualify.  A national limitation of $15 billion is to be allocated among the states and within the states on the basis of 2008 employment decline.
Qualified School Construction Tax Credit Bonds	State and local governments may issue tax credit bonds to fund construction and rehabilitation of public school facilities.	The national limitation is $11 billion for 2009 and 2010.  Sixty percent of this will be allocated to the states in proportion to the respective amount of local educational grants received by each state under the Elementary and Secondary Education Act.  The remaining 40% will be allocated to the largest local educational agencies in the nation.