Agenda Package - 10-12-09 Jt. Meeting

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I9 Department and the Internal Revenue Service ("IRS") in an amount equal to 35 percent of the total coupon interest payable to investors in these taxable bonds. This type of Build America Bond will be referred to in this Notice as "Build America Bonds (Direct Payment)." This type of Build America Bond generally may be used to finance only capital expenditures and certain issuance costs and reasonably required reserve funds. Recovery Zone Economic Development Bonds under § 14000-2 represent a third type of Build America Bond. Recovery Zone Economic Development Bonds are comparable to Build America Bonds (Direct Payment), except that they provide for a deeper Federal subsidy through a refundable tax credit paid to State or local governmental issuers in an amount equal to 45 percent (rather than 35 percent) of the total coupon interest payable to investors in these taxable bonds and they have different program requirements regarding eligible uses of proceeds for qualified economic development purposes within recovery zones, as described further herein. For additional information regarding Build America Bonds generally, see § 54AA and the initial implementation guidance on Build America Bonds set forth in Notice 2009-26, 2009-16 I.R.B 833 (April 20, 2009). SECTION 3. RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS .01 RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS TREATED AS QUALIFIED BONDS UNDER § 6431 Section 14000-2(a) provides that a Recovery Zone Economic Development Bond shall be treated as a "qualified bond" for purposes of § 6431 (relating to the refundable credit for qualified bonds allowed and payable to the issuer in the case of Build America Bonds (Direct Payment)). Section 14000-2(a) further provides that, for 4