BATON ROUGE, LA – Businesses in 31 hurricane-impacted parishes should take advantage of $7.9 billion in tax-exempt private activity bonds authorized for rebuilding in Louisiana under the Gulf Opportunity Zone Act (GOZA), according to State Treasurer John Kennedy.

“The tax-exempt financing provision of the new federal law provides the capital that our businesses desperately need and is an extraordinarily important financial option for rebuilding,” said Treasurer Kennedy. “The real benefit is that a private business will be able to use the state’s tax-exempt borrowing authority to borrow money at a low interest rate in order to help pay rebuilding costs.”

The GOZA gives Louisiana the authority to issue approximately $7.9 billion in tax-exempt private activity bonds to finance the acquisition, construction and renovation of nonresidential (commercial) property, qualified low-income residential rental housing, and public utility property located in impacted areas. Eligible projects include office buildings, warehouses, rental housing, manufacturing facilities, shopping centers, retail stores and many other private sector projects.

Because these bonds are tax-exempt and interest earnings are not subject to the IRS Alternative Minimum Tax, the interest rate will be lower than businesses can obtain in the private sector, and the bonds are more attractive to investors. The state will authorize the issuance of the bonds, and a state conduit issuer will issue the bonds on behalf of a private company. The private company receiving the bond proceeds and building the project will be responsible for making principal and interest payments with no liability to the state.

Small businesses in hurricane-impacted areas that were viable before the storms but are now less creditworthy because of the hurricanes will also be able to take advantage of the tax-exempt borrowing provision in the GOZA. Act 41 of the 2006 First Extraordinary Session of the Legislature authorizes the state to set aside nearly $150 million in GOZA funds for these small businesses, and the state will provide loan guarantees or credit enhancements to qualified small businesses for up to 50 percent of the loan amount.

“We worked very hard during the Special Session to develop a way to provide some of this funding to small businesses that are sound and can recover but cannot borrow money on their own,” said Treasurer Kennedy. “Credit difficulties should not get in the way of small businesses that can survive if they receive access to this financing.”

Businesses interested in applying for tax-exempt private activity bonds can obtain more information and an electronic application for Gulf Opportunity Zone Bonds from the Bond Commission section of the Treasury’s website located at www.latreasury.com. A copy of the application should also be sent to the Governor’s Office and to the Louisiana Department of Economic Development.