In Georgia, in order to obtain property tax “abatement”, the title to the project must be in a Development Authority, with the company having the status of a lessee. 

The “bonds for title” structure involves the issuance of industrial development revenue bonds (“IDB” or “IRB”) by the Development Authority to acquire or construct the project, and the lease of the project to the company at a rent equal to debt service on the bonds.  The company, as lessee, would have an option to buy the project for $1.00 when the bonds have been retired.  In its simplest form, the company would be the purchaser of the bonds.  The sole purpose of such a transaction is to vest title to the project in the Development Authority, as opposed to providing real financing for the project.  Thus, this transaction can be called “bonds for title.”

Bonds for title are generally used for projects that cannot be financed with federally tax-exempt bonds under the federal rules applicable to “private activity bonds.” 

Many States, particularly in the Southeast have similar financing alternative structures to give incentives to corporations.

As majority of these type agreements are for 10 year periods, we recommend having them reviewed to ensure you are receiving all economic benefits intended.

Silver Oak Advisors has an expertise in this area and has recently assisted Fortune 500 companies in Alabama and Georgia to receive refunds during the abatement period and negotiate future filing methodologies as they exited the bond agreements.

Contact us at info@silveroakadvisors.com or by phone at (877) 352-8616.

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