The U.S. federal government has created numerous vehicles for public financing as alternatives to traditional tax-exempt financing.  One such vehicle is the "qualified tax credit bond" or "subsidy bond," which is a taxable instrument. 

Issuers of qualified tax credit bonds may elect to receive a direct payment, also referred to as a "subsidy," from the U.S. Department of Treasury for all or a portion of the taxable interest on such subsidy bonds, which interest is paid by the issuer to the investor.  The payment of the subsidy lowers borrowing costs for the issuer and often results in a net interest rate which is lower than comparable tax-exempt rates.

Variations of qualified tax credit bonds include but are not limited to:

  • Build America Bonds (BABs)
  • Recovery Zone Economic Development Bonds (RZEDBs)
  • Qualified Zone Academy Bonds (QZABs)
  • Qualified School Construction Bonds (QSCBs)
  • New Clean Renewable Energy Bonds (New CREBs)
  • Qualified Energy Conservation Bonds (QECBs)

Ice Miller builds communities by advising all types of bond issuers on the benefits and challenges related to the issuance of the qualified tax credit bonds listed above.   We have served as bond counsel on more than $799,500,000 in qualified tax credit bond issues.


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