Glossary of Municipal Securities Terms

INDUCEMENT RESOLUTION

The first “official action” or evidence of official intent indicating an issuer’s intent to issue certain types of private activity bonds. The proceeds of such bonds generally may be used on a tax-exempt basis only to finance capital costs of a project incurred after official action has been taken toward issuing the bonds, and therefore capital costs paid or incurred in connection with the acquisition and construction of the project prior to the inducement resolution may not be reimbursed (subject to certain limited exceptions). See: REIMBURSEMENT RESOLUTION; RESOLUTION. Compare: AUTHORIZING RESOLUTION.

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