Tax Free Financing

Description

The Quad Cities Regional Economic Development Authority (QCREDA) acts as the issuer of the bonds, passing its DOUBLE tax-exempt status on to finance the acquisition of fixed assets including land, buildings, machinery and equipment. Because the interest on the bonds is not subject to state or federal income taxes, investors and lenders require a lower interest rate to achieve an equivalent after-tax return. Therefore, the borrower receives a preferential interest rate, generating substantial savings.

Eligibility

Manufacturing Bonds – Industrial Revenue Bonds are available for manufacturers of tangible goods At least 75% of the bond proceeds must be used for expenditures directly related to the manufacturing process. No more than 25% may be used for ancillary facilities such as warehouse or office space. The borrower’s capital expenditures cannot be greater than $20 million (except with a lease) in the city where the project is located. This $20 million is the amount spent over a defined six-year period: 3 years before financing and 3 years after.

Not-For-Profit Bonds – Tax-Exempt bonds are available for Not-For-Profit 501c(3) companies. Eligible borrowers are any 501c(3), which can include hospital systems, medical centers, behavioral health centers, medical clinics, continuing care centers, and YMCAs.

Housing Bonds – Senior housing and multi-family housing bonds are available to for-profit developers. Developers must agree to set aside a portion of a financed project’s units for tenants at a certain income level.

Funds can be used to build a new facility, acquire land and buy new machinery and equipment. Funds can be used to acquire an existing facility as long as 15% or more is used to rehab the structure. Funds expended prior to sixty days before receiving initial approval from QCREDA may not be eligible.

The capital improvements must take place in the territory of QCREDA in the counties of Carroll, Henry, Jo Davies, Knox, Lee, Mercer, Rock Island, Stephenson and Whiteside.

Benefits

  • Lower Interest Rate – An QCREDA Double Tax Exempt Bond is exempt from state and federal income taxes, making it an attractive investment for the bondholder. The interest rate available on these bonds is far lower than conventional financing, and you can expect your interest savings to range from 150 – 300 basis points lower than a conventional loan.
  • Finance up to 100% of the project cost – contingent upon meeting credit standards of a local bank backing the bond.
  • Smooth Process – QCREDA has been described as a “Nimble Issuer” We have flexible guidelines and an expedited approval process. We can assemble a team of IRB specialists who have a thorough understanding of all the legal and financial aspects of this type of transaction. We’ll work closely with you every step of the way, answering your questions, helping you avoid pitfalls, and making sure you get the financing that’s right for you.

Application

Companies interested should compete a one-page application and submit a non-refundable application fee. There is an issuance fee paid at closing along with other professional costs. The cost of issuing a Bond is generally more expensive than a conventional loan, but the total costs are usually break even in the first year of interest savings and will continue through the life of the bond.

Contact


For more information please contact Warren Ribley, Executive Director, Quad Cities Regional Economic Development Authority (QCREDA), 1601 River Drive, Suite 301, Moline Illinois 61265, Tel: 217-836-9553, Email: wribley@qcreda.com