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Low Cost (Maybe Free) Bond Money
by Jon Greenberg on
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Let's start with free money. Under the stimulus act, ARRA, New Hampshire can tap into $29,784,000 of interest-free bonds for school construction. The bond has to be issued by the state or a local government body and the money must be used to buy land for, build, or renovate a school building. The bond comes interest free because Washington gives investors a federal tax credit in an amount designed to replace 100 percent of the interest payments on the bonds.
The Bureau of School Approval & Facility Management is in charge of this program. You want other details? You can find them here
http://www.irs.gov/pub/irs-drop/n-09-35.pdf
The state, counties and municipalities can dip into another $225,000,000 in two other types of bonds: Recovery Zone Economic Development Bonds (90 million) and Recovery Zone Facility Bonds (135 million). There are significant tax status differences between the two but the bottom line is that these bonds should be used to spur projects in defined economic development zones. The bonds come with a 45% subsidy from Washington. So if the borrower owes $100 in interest, Washington kicks in $45 of that. The principal of course needs to be repaid too.
For more details:
http://www.treas.gov/press/releases/tg168.htm
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