PRIVATE ACTIVITY BOND (PAB)
The PAB is Guam’s tax-exempt bonding authority creating a lower cost, long-term source of capital under the Federal Tax Act of 1986.
The Private Activity Bonds available on Guam are as follows:
QUALIFIED MORTGAGE BONDS
- Issued to provide mortgage financing for single family residential property
- 95% of net bond proceeds must be loaned to mortgagors
- Mortgagors must be first-time homebuyers and must be for their principal residence
- Purchase price of a residence must not exceed 90% of the average purchase price of all single family residential sales during the last 12 months
- Mortgages must be made to persons whose family income is 115% or less of the applicable median family income
MORTGAGE CREDIT CERTIFICATE
- Issued by a government agency prior to the financing of a mortgage with a bank
- Issuer elects not to issue PABs and in their place issues mortgage credit certificates to first-time homebuyers
- Certificates can only be issued to first-time home buyers for their primary residence whose maximum annual income may not exceed certain limits
QUALIFIED REDEVELOPMENT BONDS
- Issued for infrastructure projects that do not qualify for Government bonds
- Typically issued for projects that involve special district financing such as tax incremental financing
- New construction projects are not permitted
QUALIFIED RESIDENTIAL RENTAL PROJECTS
- Must meet one of two tests (set-aside requirements)
- 20-50 Test – 20% or more of the residential units in the project must be occupied by individuals whose income is 50% or less of area median gross income (AMGI)
- 40-60 Test – 40% or more of the residential units in the project must be occupied by individuals whose income is 60% or less of AMGI
- Whichever test is elected applies during the qualified project period, which is the later of 15-years from which 50% of the residential units in the project are occupied or on the date on which no tax-exempt PABs issued with respect to the project are outstanding.
QUALIFIED ENTERPRISE ZONE FACILITY BONDS
- Issued by a qualified business to finance the cost of commercial, retail or similar facility used by the borrower
- The borrower must be an “Enterprise zone” business
- 95% of the proceeds from the bond issue must be used to finance “qualified zone property”
EXEMPT FACILITY BONDS
- Sewage Facilities
- Solid Waste Disposal Facilities
- Water Furnishing Facilities
- Facilities for Furnishing of Electric Energy or Gas
- Issued to acquire land and construct new facilities, expand/renovate existing facilities or purchase new equipment
- For facilities that create tangible products and have a strong job creation/retention component.
FAQs
What are Private Activity Bonds?
Do Private Activity Bonds feature any kind of government funding, or any public guarantee or grant?
Who would invest in or purchase a Private Activity Bond?
DOWNLOADS
Private Activity Bond Program
Private Activity Bond Application
Volume Cap Reservation for 2021