The Georgia Department of Community Affairs ("DCA") has provided guidance in a July 25, 2025 letter as to how it will handle the permanent bond test threshold reduction from 50% to 25%, as set forth in the One Big Beautiful Bill Act passed this year. As the lower bond test may result in excess private activity bond volume cap ("PAB VC") on deals that will close in 2026 ("Pipeline Projects"), DCA will reclaim all excess PAB VC without requiring Owners to replace the PAB VC with other fund sources, and DCA will not reclaim any PAB VC necessary for the deal to be financially feasible.
Owners of projects with an award from a prior year application cycle which has not yet closed have until August 15, 2025 to elect between Option A and Option B (set out below) and submit the required documentation through the Empahsys Developer Portal:
- Option A – Provide DCA with letter(s) from the equity
investor, primary lender, developer, and bond counsel confirming
that closing will occur by December 15, 2025, with
such letter(s) also setting forth the projected closing date. The
above-described parties may all sign onto one letter or submit
substantially identical individual statements.
- Failure to close by December 15, 2025 will likely result in a penalty, up to and including disqualification of Project Team (as defined in the 2024-2025 QAP) members from future funding rounds.
- Owners who choose this option and have not closed by
November 1, 2025, will be required to perform the
aggregate basis analysis a second time, no later than
November 15, 2025. Following submission, DCA will
determine the potential carryforward needed for the Pipeline
Project.
- Failure to complete and submit the second analysis by
November 15, 2025 is likely to result in a
penalty, up to and including disqualification of Project Team
members from future funding rounds.
- Failure to complete and submit the second analysis by
November 15, 2025 is likely to result in a
penalty, up to and including disqualification of Project Team
members from future funding rounds.
- Option B – Completion of a new Core Application workbook
for each deal, showing PAB VC financing as the higher of 30%
aggregate basis or maximum permanent supportable debt.
- Pipeline Project teams who perform this aggregate basis analysis resulting in a 2026 closing will not be subject to penalties, as outlined in the 2024-2025 QAP.
DCA staff will be reaching out to developers with Pipeline Projects. Be on the lookout for their correspondence.
For the upcoming 2025 application cycle, applications should show PAB VC at the higher of 30% aggregate basis or maximum permanent supportable debt. DCA will determine the highest allowed PAB VC, which may be less than the requested amount but will not be lower than the 30% aggregate basis.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
