State Volume Cap

Federal law imposes a limit, or cap, on the amount of tax exempt Private Activity Bonds that can be issued in Louisiana by the LPFA or any other issuer of bonds.

This limit is known as the Louisiana State Volume Cap or Private Activity Bond Volume Cap. Tax exempt bonds, other than (a) qualified veterans’ mortgage bonds, (b) qualified 501(c)(3) bonds, (c) bonds issued as exempt facility bonds for airports, docks and wharves, and environmental enhancement of hydroelectric generating facilities, and (d) a portion of bonds issued to finance high speed intercity rail facilities are subject to the Louisiana State Volume Cap. The Louisiana State Volume Cap is computed and adjusted annually by multiplying the number of residents in the State by an amount set forth in Federal Law. The Governor of Louisiana must issue an Executive Order granting a bond issue an allocation from Louisiana’s State Volume Cap prior to the issuance of the bonds in order for the interest on the bonds to be tax exempt.