Tribal Economic Development Bonds (in Plain English)

The Orrick Public Finance Green Book Series

By now, you’ve probably seen dozens of articles about Tribal Economic Development Bonds (“TED Bonds”). Most of the commentary seems to focus on dry technical and legal requirements, in particular IRS administrative procedures for TED Bonds. That information is useful. However, it doesn’t quite put things in a perspective that’s accessible to most tribal leaders trying to answer a bigger question—that is, what are TED Bonds and how can they help my tribal project?

With the bigger question in mind, this bulletin takes a slightly different approach. First of all, we don’t assume TED Bonds are right for everybody. They may be perfect for some tribes but less so for others. Second, we’ve tried to do more than just deconstruct regulatory guidance put forward by the IRS. IRS guidance is important for complying with tax laws, but it doesn’t help much with the business aspects of project finance. Our goal is to provide a simple, easy to understand discussion of what TED Bonds are (and what they are not) and why you might want to consider them. To that end, we’ve tried to offer some practical examples to illustrate our points and assist tribal leaders in evaluating TED Bonds as a financing tool.

Please note, this bulletin isn’t meant to be a comprehensive dissertation on TED Bonds. That’s beyond our scope. Besides, information overload can be counterproductive. Our hope is that we give you enough information to continue a thoughtful discussion of TED Bonds with your own bond counsel.