A $28 million bond transaction using a unique form of tax increment financing to raise funds for a development district in Prince Georges County, Md. Recently won an award by Council of Development Finance Agencies.

The bonds, which won CDFA's 2016 Excellence in Development Finance Project Award, were issued by the Revenue Authority of Prince George's County in Maryland in April. The bond proceeds are to be used to buy land, build infrastructure and encourage development in what project officials describe as a "blighted" section of the county roughly five miles southeast of Washington across the Anacostia River.

County officials said the Suitland-Naylor Road Development District, which was created three years ago, will attract investment and expand the district's commercial tax base. The project is unique because, unlike most tax increment financings which rely on the growth of tax revenues from a specific new development, the bond proceeds will be used to acquire unspecified property and to repay the bonds from the expected growth in a broader, 1,800-acre section of the county. Also, unlike typical set repayment schedules in TIF deals, payments here are based on the availability of revenues in all years except on final maturity dates.

Joe Fanone, a public finance partner with Ballard Spahr in Washington, which was bond counsel, said that the deal was unusual because of its reliance on existing tax revenues. "Unlike most TIF deals which look to new projects being constructed within a TIF district, this deal basically looked at existing incremental tax revenues in order to repay debt and not looking for additional development to occur within the district," Fanone said. "From an investor's perspective, we wanted them to look at the transaction with the notion they're going to get repaid through existing incremental tax revenues and not look to future development."