Multifamily Housing & Nonprofit Housing Bonds

 

   
   

Tax-Exempt Bonds: Nonprofit Ownership

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.