Remedial Action

An event that occurs after the Closing of Tax-Exempt Bonds may cause the Tax-Exempt Bonds to be treated as Taxable Bonds unless a remedial action is taken by the Issuer in accordance with Treasury Regulations Sections 1.142-2, 1.141-12 and 1.144-2. In most cases, sale or lease of property financed by Governmental Bonds or Qualified 501(c)(3) Bonds to a private entity can result in the need to take Remedial Action. Allowable remedial actions generally include Redemption or Defeasance of non-qualified Bonds, timely use of disposition proceeds in an alternative qualifying manner or alternative qualifying use of the facility.

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See Also

Tax-Exempt Bonds

A bond, the interest on which is excludable from gross income for federal income tax purposes.

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Debt Limit

Statutory limit on the amount of debt an issuer can incur or have outstanding at any one time.