Use of bond financed property when completed and placed in service will be reviewed by the Oversight Officer or other appropriate department head or designee. Use of bond financed property must be measured separately for each bond issue.
A. Limit On Private (Nonexempt) Use: Average annual private use of bond financed property over the life of the issue cannot exceed ten percent (10%) of the proceeds (or 5 percent if the use is unrelated to the governmental use or disproportionate to the governmental use). Private use will be determined annually as a percentage of total use of proceeds of the bond issue.
B. Review Of Contracts And Agreements: Contracts and agreements with private business users for the lease, management, sponsored research or any other potential private/nonexempt use of bond financed property will be reviewed prior to execution for compliance with the private use limits. This review will include a determination of whether any arrangement meets the safe harbors of Internal Revenue Service Rev. Proc. 97-13, as modified by Rev. Proc. 2001-39, or, with respect to research arrangements, Rev. Proc. 2007-47. It will also include a determination of whether any arrangement meets the exception for incidental use under Treasury Regulations section 1.141-3(d)(5), the exception for general public use under Treasury Regulations section 1.141-3(c), or the exception for certain short term arrangements under Treasury Regulations section 1.141-3(d)(3).
C. Tracking Private (Nonexempt) Use: Agreements with private business users or nonprofit organizations for lease or management or services contracts or other private business use involving bond financed property will be tracked and aggregated with other private business uses for compliance with the ten percent (10%) (or 5 percent) limit, as set forth in the Tax Certificate and Agreement for the applicable bonds.
D. Change In Use: No item of bond financed property will be sold or transferred to a nonexempt party without advance arrangement of a "remedial action" under the applicable Treasury Regulations (see Treasury Regulations section1.141-12). (2019 Compilation)