Scott Shaver featured in the "Ask the Legal Professionals" section of the Phoenix Business Journal

How can state or local governments benefit by receiving federal subsidies to cover a portion of their borrowing costs?

In 2009, the American Recovery and Reinvestment Act authorized state and local governments to issue Build America Bonds.  The federal government provides direct payments to the issuer of Build America Bonds equal to 35% of the issuer's interest costs.  Currently, all Build America Bonds must be issued before 2011.  While legislation extending the program has been introduced, most plans call for a smaller interest subsidy to Build America Bond issuers.  The IRS has recently published new guidance, tax forms, and compliance questionnaires for Build America Bonds.  In addition, recent job-creation legislation has allowed other tax-credit bonds for school construction and clean energy improvements to receive direct payments in the same manner as Build America Bonds.