Since its inception in 1987, the Bond Cap Allocation Program has approved more than $16.9 billion in tax-exempt private activity bonds and has been responsible for issuing authority for a variety of projects in Washington state. The program authorizes the issuance of bonds under the federal bond volume cap, but does not directly fund or finance projects. Funds used for projects receiving permission to issue tax-exempt private activity bonds come from private investors who purchase the bonds, not from governmental entities.
News and updates
Upcoming Bond Cap discussion group
The Bond Cap Allocation Program will be conducting a virtual discussion on a semi-annual bases. If you are interested in attending these virtual meetings, please contact Allan Johnson, Program Manager, via email at Allan.Johnson@Commerce.wa.gov or by phone at 360-725-5033.
Meetings typically include conversations about recent issuances, upcoming allocation requests, carryforward designation, volume cap usage trends, recent reports, stakeholder outreach, national bond cap policy, and program administration.
How to apply
Project developers need to work with an authorized bond issuer to access tax-exempt private activity bond financing for a project. Both local and state-level issuers are available to assist you with project development and bond issuance. They can help you determine if your project is appropriate for tax-exempt private activity bond financing. Below is a list of some of the more active issuers in the state.
Local Housing Authorities
- Bellingham/Whatcom County Housing Authority
- King County Housing Authority (KCHA)
- Kitsap County Consolidated Housing Authority (KCCHA)
- Pierce County Housing Authority
- Renton Housing Authority
- Seattle Housing Authority (SHA)
- Snohomish County Housing Authority (HASCO)
- Tacoma Housing Authority
- Vancouver Housing Authority
- Visit the Association of Washington Housing Authorities for contact information for other local housing authorities.
Statewide Issuers
Each type of Bond Cap project requires a separate application form due to differences in the criteria for the various projects outlined in federal and state law. In addition to the basic application form, all applicants for Bond Cap allocations must submit Statement of Intent forms from the bond counsel and underwriter, as well as a copy of an inducement resolution from the issuer’s governing body.
Projects in all categories that involve new construction or that require environmental work on the project site must submit documentation of compliance with state and federal environmental requirements. Contact the Bond Cap manager prior to submittal to ensure you provide adequate documentation — but that you also don’t submit anything which isn’t necessary.
Projects in the Small Issue and Exempt Facilities categories must submit a signed Employment Security Agreement stating that any new jobs created by the project will be advertised through the Employment Security Department and, when possible, will be offered to low-income residents.
- Exempt Facilities Application (Word)
- Housing Application (Word)
- Small Issue Aggie Application for First-Time Ranchers or Farmers (Word)
- Small Issue Manufacturing Application (Word)
- Bond Council Statement of Intent (Word)
- Underwriter Statement of Intent (Word)
- Employment Security Agreement (Word)
- Notification of Issuance (Word)
- Notification of Issuance and Bond 101 Online Submission Tool
Resources
What Does the Bond Cap Allocation Program Do?
We are a federally-authorized program that regulates “tax-exempt private activity bonds.” The program reviews and approves projects within our state to ensure compliance with federal and state laws.
What is a Bond Cap?
It is a ceiling — or cap — on the amount of qualified tax-exempt private activity bonds a state may authorize each year.
What is a Tax-Exempt Private Activity Bond?
Tax-exempt private activity bonds provide lower-cost financing for eligible projects. Tax-exempt means the bond investor does not have to pay federal taxes on interest earned on the bonds. Private activity bonds are a financing option for projects that have a substantial benefit for private business or individuals, but also provide significant benefits to the public. Unless authorized under Bond Cap, private activity bonds do not qualify for tax-exempt status.
Who is Eligible to Apply to the Program?
Projects are eligible if they fit into one of four categories: Small-issue manufacturing, housing (both multifamily and single family), exempt (capital) facilities, and student loans. Businesses or developers work with public authorities to develop projects and issue the bonds for financing.
What is the Application Process?
A private or government entity submits a request for bond financing to a bond issuing authority. The issuing authority assesses the financing options. If the project qualifies for tax-exempt private activity bonds, the issuing authority submits an application to the Bond Cap Program. Generally, the issuer will only submit the request after all other financing is in place, the project is at an advanced stage of readiness, and they are confident the bonds will be sold. The Bond Cap Program reviews the application and, if it approves the project, awards a Certificate of Allocation to the issuing authority. The certificate allows the issuing authority to issue the tax-exempt bonds. The bonds must be issued by the deadline stated in the certificate, generally no later than December 15 of the same year. Go to the Bond Issuers and Application Forms website for applications and other forms.
What State and Federal Laws Govern Bond Cap?
The federal bond cap laws, first enacted in 1986, specify the total volume of tax-exempt private activity bonds — and other bonds with volume caps, such as Qualified Energy Conservation Bonds — that may be issued annually in each state. Federal law also describes what types of projects are eligible for each type of bond. See the right sidebar for links to statutes and rules. State law divides the state’s total bond cap by percentage among the eligible project types, and provides guidance for estimating the public value of projects and prioritizing allocations. State laws also regulate issuing authorities as well as the issuance of industrial development bonds, many of which use bond cap allocations.
Seattle’s Africatown Community Land Trust and Community Roots Housing
Feeling the impacts of gentrification and rising housing costs in the historic heart of Seattle’s Black community, residents of the city’s Central District have been active in advocating and organizing for more affordable housing to address the displacement of the area’s most marginalized residents.
Those efforts met with considerable success on the Africatown Plaza project, an affordable housing partnership between nonprofits Africatown Community Land Trust (ACLT) and Community Roots Housing.
In 2021, ACLT received an allocation of $30 million in private activity bonds through the Washington State Housing Finance Commission to develop Africatown Plaza in collaboration with Community Roots Housing. This allocation covers approximately half of the total development cost of $60 million.
Other sources of funding include municipal grants and low-income housing tax credits. The building will offer 126 new units of affordable housing available to residents making up to 50% of area median income.
In addition to 59 studio and 36 one-bedroom apartments, Africatown Plaza will feature 18 two-bedroom and 13 three-bedroom apartments. Africatown Plaza will also offer residents over 4,000 square feet of common areas and will provide a satellite office space for ACLT.