This is a MuniPro demonstration of a redesigned Texas Bond Review Board website. It is not the official BRB site: nothing filed here reaches BRB, and the email addresses shown are BRB's own. The official site is brb.texas.gov.

Private Activity Bond Allocation Program

What private activity bonds are, why Texas allocates them, and where to find the program's rules, program years and resources.

What a private activity bond is

Private activity bonds are bonds that meet any or all of three tests.

  • Private Business Use Test: more than 10 percent of the proceeds are to be used for any private business use.
  • Private Security or Payment Test: payment of principal or interest on more than 10 percent of the proceeds is directly or indirectly secured by, or comes from, a private business use.
  • Private Loan Financing Test: proceeds will be used to make or finance loans to persons other than governmental units.

Federal limits

Federal law has limited tax-exempt financing of private activities since the Tax Reform Act of 1986 (the Tax Act).

The Tax Act also limits the types of privately-owned public purpose projects that can use tax-exempt financing.

The types of issues that matter here are mortgage revenue bonds (MRBs), small-issue industrial development bonds (IDBs), certain state-voted bond issues, and student loan bonds.

They also include bonds for a variety of "exempt facilities." Exempt facilities include qualified residential rental projects (multi-family housing), sewage facilities, solid waste disposal facilities and hazardous waste disposal facilities.

The Tax Act sets a volume ceiling on the total principal amount of tax-exempt private activity bonds each state may issue in a calendar year.

How Texas allocates the ceiling

Section 146(e) of the Internal Revenue Code lets each state devise an allocation formula or process for its ceiling.

Texas built a system that gives each eligible project type a chance at some allocation. The state ceiling is limited, so the system cannot meet all demand. It does ensure an equitable method of allocation.

Chapter 1372 of the Texas Government Code sets the allocation process for Texas.

The Private Activity Bond Allocation Program regulates the volume ceiling. It also monitors demand and the use of private activity bonds each year.

BRB has run the program since January 1, 1992.

Program pages

Questions

Send questions about the program to the Program Administrator. You can also call (512) 463-1741.

Content from BRB's pages, captured 2026-10-03: https://www.brb.texas.gov/pab-program-overview/; https://www.brb.texas.gov/2027-program-year/