The Unified Volume Limitation Allocation Act 496 of 1988 provides the guidance for the Department of Treasury to implement the private activity bond process.

Private Activity Bonds are tax exempt securities issued by or on behalf of a local government to provide debt financing used for the trade or business of a private user, as provided by Internal Revenue Code (IRC) Section 141 et seq. These bonds are used to attract private investment for projects that have some public benefit. This type of bond results in reduced financing costs because of the exemption from Federal tax. It is important to note that like other municipal securities, bond counsel is responsible for both Federal and State tax law compliance.

Each year, the Treasurer shall determine the unified volume limitation and the allocation of the unified volume limitation for the following calendar year. The unified volume limitation is determined by multiplying the State's estimated population as of July of the previous year by a base rate of $85. Each year, the base rate may be adjusted upward (in $5 increments) depending upon the amount of inflation. The allocation is determined by the number of responses received after publication in three newspapers of general circulation in different parts of the state.

The allocation is reflected in the Master Order.