Tax-Exempt Bonds: Nonprofit Ownership

• Nonprofit Housing Financed with Bonds 2000 - 2008 (PDF)
• Nonprofit Housing Lenders 2000 - 2008 (PDF)

Eligible Organizations

Organizations with a 501(c)(3) determination letter from the IRS

Eligible Activities

Nonprofit organizations can use tax-exempt bonds to finance housing that is directly related to their mission, including:

• Construction and rehabilitation of buildings
• Purchase of land and buildings
• Refinancing of existing capital debt
• Pre-Development costs, such as architectural, engineering, accounting, and legal costs directly related to the project
• Low-Income Housing Tax Credits cannot be used with this type of bond

Eligible Facilities and Equipment

The full range of living options provided by nonprofit organizations can be financed:

• Independent living units (apartments)
• Assisted living units
• Group homes
• Transitional housing
• Single room occupancy units
• Emergency shelters
• Residential facilities for the homeless
• Limited equity cooperatives (restrictions apply)
• Nursing homes
• CCRCs (continuing care retirement communities)
• Housing for special-needs populations

Financing Large & Small Loans with STEP or Public Bond Sales

Smaller projects generally use the Streamlined Tax-Exempt Placement (STEP) Program.  It uses standardized documents to save time and costs.  The lender makes the credit decisions.  The lender earns tax-exempt interest from the bond and passes the savings on to the borrower.

Larger projects, when borrowing typically exceeds $5 million, investment banks sell the bonds publicly to retail and institutional investors.

Application

Nonprofit Housing Program Application

This page was modified on 10/7/2008.