Volume Cap is federally authorized and refers to the maximum amount of tax-exempt private activity bonds that can be issued annually in each state. Annually, each state receives an allocation of Volume Cap that is referred to as the "state ceiling." This ceiling is based upon an IRS Inflation Adjustment and IRS Calendar Year Resident Population Estimates. For 2013, the IRS Inflation Adjustment is $95 per capita. Ohio's state ceiling for calendar year 2013 is $1,096,701,375
Tax-exempt private activity bonds facilitate public and private sector collaboration in providing financing for eligible projects at interest rates below that of the conventional market. The interest that bondholders earn is not subject to federal taxes, and may not be subject to state and local income tax depending upon the type of bond issuer. Each state establishes rules for allocating the state ceiling among those governmental units and authorities in the state that have authority to issue tax-exempt private activity bonds (i.e. counties, cities, port authorities, housing authorities, quasi state agencies, as well as some states).
The State of Ohio accepts applications for allocation of Volume Cap from authorized bond issuers or bond counsel based upon selection rounds held three times per year. In addition, the Director of the Ohio Development Services Agency is authorized with a set-aside of Volume Cap for allocation on a discretionary basis.
Note: Those interested should consult with bond counsel and the federal tax codes governing private activity bonds before applying for Volume Cap