Tax Exempt Revenue Bond Financing

Tax Exempt Revenue Bond Financing

Tax Exempt Revenue Bonds are a financing method for major projects providing long-term capital. Amortization is in the range of 20 to 30 years.

Eligible Projects

• Multi-family housing projects where at least 20% of the units are reserved for households meeting certain guidelines on household income

• Fixed assets: land, building, new construction and equipment financing for manufacturing concerns

• Fixed asset financing for 501(c)(3) non-profit corporations

• Publicly owned facilities and pollution control facilities

• Costs of insurance generally dictate that eligible projects must generally be greater than $1 million to be economically feasible.

• Private activity manufacturing transactions have a limit of $10 million

• Prospective projects must provide an opinion of eligibility from bond counsel and provide evidence that an underwriter or bond purchaser has been identified before any action of the issuing authority

Benefits

• Interest earned by bond purchasers is exempt from federal and usually state taxes, resulting in lower interest rates for bond transactions

• Interest rates, depending upon the credit of the borrower, may be 85 to 90% of prime for fixed interest transactions and even lower on floating rate transactions

Additional Information

• Multi-family bonds are routinely coupled with federal and state low-income housing tax credits to provide further benefit

• Non-profit corporations can utilize bank eligible bonds, which make it more attractive for banks to buy these bonds.

• Based on approval of bond allocation for the project from the state, in the City of St. Louis, bonds are issued by an exempt authority — one of the Development Boards staffed by SLDC — including IDA, LCRA, PIEA or Port Authority.