John Cross, associate tax legislative counsel for the Office of Tax Policy for the U.S. Department of the Treasury
, explained the new guidelines for Tribal Economic and Development (TED) Bonds at a July 17, 2012 summit in New York City for Native American tribal representatives, lawyers, American Indian owned business leaders, investors and corporations. The summit was sponsored by the Native American Finance Officers Association
According to Cross, only about $200 million of the $2 billion available under the tax-exempt pilot program of the American Recovery and Reinvestment Act
of 2009 was used. The Treasury department recently announced that the bond authority is now available again, this time with more flexible terms.
The Treasury department no longer will require the bonds to be only used for government buildings, but expanded the uses to a variety of economic development projects aimed at job creation and economic growth. One limitation, however, is the bonds may not be used to finance any portion of a facility that houses or conducts Class II or Class III gaming. In addition, tribal governments are no longer required to pass the “essential government test” to issue bonds.
Cross emphasized that the projects must be ready to develop with a plan for financing in place before applying because a tribe must issue the proposed bonds within 180 days after receiving an allocation. Extensions to the time limit are “very unlikely,” according to a NAFOA panel participant.