Bond Cap Allocation Program

Since its inception in 1987, the Bond Cap Allocation Program has approved more than $16.9 billion in tax-exempt private activity bonds issuing authority for a variety of projects in Washington state. The program authorizes the issuance of bonds under the federal bond volume cap, but does not directly fund or finance projects. Funds used for projects receiving permission to issue tax-exempt private activity bonds come from private investors who purchase the bonds, not from governmental entities.

Frequently Asked Questions

What Does the Bond Cap Allocation Program Do?

We are a federally-authorized program that regulates “tax-exempt private activity bonds.” The program reviews and approves projects within our state to ensure compliance with federal and state laws.

What is a Bond Cap?

It is a ceiling — or cap — on the amount of qualified tax-exempt private activity bonds a state may authorize each year.

What is a Tax-Exempt Private Activity Bond?

Tax-exempt private activity bonds provide lower-cost financing for eligible projects. Tax-exempt means the bond investor does not have to pay federal taxes on interest earned on the bonds. Private activity bonds are a financing option for projects that have a substantial benefit for private business or individuals, but also provide significant benefits to the public. Unless authorized under Bond Cap, private activity bonds do not qualify for tax-exempt status.

Who is Eligible to Apply to the Program?

Projects are eligible if they fit into one of four categories: Small-issue manufacturing, housing (both multifamily
and single family), exempt (capital) facilities, and student loans. Businesses or developers work with public authorities to develop projects and issue the bonds for financing.

What is the Application Process?

A private or government entity submits a request for bond financing to a bond issuing authority. The issuing authority
assesses the financing options. If the project qualifies for tax-exempt private activity bonds, the issuing authority submits an application to the Bond Cap Program. Generally, the issuer will only submit the request after all other
financing is in place, the project is at an advanced stage of readiness, and they are confident the bonds will be sold. The Bond Cap Program reviews the application and, if it approves the project, awards a Certificate of Allocation to the issuing authority. The certificate allows the issuing authority to issue the tax-exempt bonds. The bonds must be issued by the deadline stated in the certificate, generally no later than December 15 of the same year. Go to the Bond Issuers and Application Forms website for applications and other forms.

What State and Federal Laws Govern Bond Cap?

The federal bond cap laws, first enacted in 1986, specify the total volume of tax-exempt private activity bonds — and other bonds with volume caps, such as Qualified Energy Conservation Bonds — that may be issued annually in each state. Federal law also describes what types of projects are eligible for each type of bond. See the right sidebar for links to statutes and rules. State law divides the state’s total bond cap by percentage among the eligible project types, and provides guidance for estimating the public value of projects and prioritizing allocations. State laws also regulate issuing authorities as well as the issuance of industrial development bonds, many of which use bond cap allocations.

Applying for Bond Cap

Bond Cap Updates

Washington's Allocation Rises to $976.6 Million

The federal government bases each state’s annual Bond Cap allocation on its population. Washington’s population increased to 7,812,880 during 2023, according to the U.S. Census. Thus, our tax-exempt private activity bond authority available for the 2024 calendar year has increased and is now $976.6 million.

Calculation for Washington's 2024 Allocation

Initial Allocations by Category

Exempt Facilities20.0% of Allocation$195,322,000
Housing33.6% of Allocation$328,140,960
Housing (Local Housing Authorities)8.4% of Allocation$82,035,240
Small Issue25.0% of Allocation$244,152,500
Student Loans5.0% of Allocation$48,830,500
Remainder and Redevelopment8.0% of Allocation$78,128,800

The Bond Cap allocation is the total amount of borrowing that qualifying types of private projects are allowed to do each year at less expensive tax-exempt rates under federal law. The lenders (bond purchasers) for these projects are private investors. No governmental funds are involved.

For more information on how the allocation of private activity bond issuing authority works, see the Bond Cap Program’s 2022 Biennial Report (PDF) or contact Program Manager Allan Johnson.

Upcoming Bond Cap Discussion Group

The Bond Cap Allocation Program will be conducting a virtual discussion on a semi-annual bases. If you are interested in attending these virtual meetings, please contact Allan Johnson, Program Manager, via email at or by phone at (360) 725-5033.

Meetings typically include conversations about recent issuances, upcoming allocation requests, carryforward designation, volume cap usage trends, recent reports, stakeholder outreach, national bond cap policy, and program administration.

Project Highlight: Seattle’s Africatown Community Land Trust and Community Roots Housing

Feeling the impacts of gentrification and rising housing costs in the historic heart of Seattle’s Black community, residents of the city’s Central District have been active in advocating and organizing for more affordable housing to address the displacement of the area’s most marginalized residents.

Those efforts met with considerable success on the Africatown Plaza project, an affordable housing partnership between nonprofits Africatown Community Land Trust (ACLT) and Community Roots Housing.

In 2021, ACLT received an allocation of $30 million in private activity bonds through the Washington State Housing Finance Commission to develop Africatown Plaza in collaboration with Community Roots Housing. This allocation covers approximately half of the total development cost of $60 million.

Other sources of funding include municipal grants and low-income housing tax credits. The building will offer 126 new units of affordable housing available to residents making up to 50% of area median income.

In addition to 59 studio and 36 one-bedroom apartments, Africatown Plaza will feature 18 two-bedroom and 13 three-bedroom apartments. Africatown Plaza will also offer residents over 4,000 square feet of common areas and will provide a satellite office space for ACLT.

Street view of Spring Street and 24th Avenue