Private Activity Bond

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?

DOWNLOADS
Private Activity Bond Program
Private Activity Bond Application