Arizona Industrial Development Authority
Nationally, private activity bonds (PABs) are issued by industrial development authorities (IDAs) for the benefit of private users. Repayment of the bonds is an obligation of the private user, not of the issuing authority. The proceeds of these bonds are used for industrial and other private purposes and the interest on the bonds may be exempt from federal income tax (IRC Sec. 103). In Arizona, the interest on the bonds is also exempt from state income tax.
The AFA’s Arizona Industrial Development Authority (AZIDA) issues PABs for commercial activities using a streamlined process at competitive rates.
Private Activity Bond Volume Cap
Some PABs need to obtain Volume Cap in order for the interest on them to be excludable from federal income tax. Each year the state receives its Volume Cap ceiling – representing $100 per state resident. Beginning with the 2017 cycle, allocation of Arizona’s Volume Cap is handled by the Arizona Finance Authority.