Financing Parking Garages

Market Access

In addition to tax-exempt funding, the Finance Authority can also help qualifying organizations, such as the ones listed below, gain access to the bond market.

  1. INSTITUTIONAL INVESTORS: The bonds are credit enhanced and sold in the market. One option is to use a credit enhanced fund, like our Bond Fund, to sell the bonds in the marketplace, taking advantage of the series of reserves in place (including $10 million in cash and Letter of Credit) to allow for more competitive rates for the borrower.
  2. PRIVATELY HELD: The bonds are placed with the borrower’s lending institution. This can happen when the bank is willing to hold that bond as an investment in its portfolio. Before doing this, most banks will make sure they have a thorough understanding of its customer and the proposed transaction.
  3. OTHER SOURCE: The bonds are purchased by a related entity of the borrower that is willing to assume the risk of the transaction
  4. BORROWER BASED: If the borrower is a rated credit, the bonds can be sold in the marketplace on the strength of the borrower’s credit

Tax Exemptions

The Finance Authority is also able to take title to parking garages that are being built in Central Ohio. If the agency were in the chain of title, the construction materials used to construct the parking garage would not be subject to the state and local sales tax because the agency is a public entity, which is exempt from the sales tax.

As with all tax-exempt financings, the IRS Code dictates specific eligibility rules. The Finance Authority’s team will work with you to determine if your project is appropriate for this program.

Parking Garage Issues

There are special tax rules that apply to parking garages that hope to be structured as a tax-exempt financing. A few of those rules include:

  • Generally, if a garage is to be financed tax-exempt, it must be open to the public and the public must be likely to use it
  • Signage must clearly state it is a public garage
  • No more than 10% of the spaces can be reserved
  • No more than 10% of the annual debt service for the garage construction financing can come from the reserved spaces