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Tax Exempt Industrial Revenue
Bond (IRB)
Tax Exempt
Industrial Revenue Bond (IRB) Financing
With Tax Exempt Industrial Revenue Bond
(IRB) financing, you can get up to $10 million per project at a rate that’s
below prime. You can even get terms up to 30 years. The U.S. congress passed
the Omnibus budget Reconciliation on
August 5, 1993, which
permanently restores the authority to issue tax exempt IRBs.Benefits
Save money through
rates that are below Prime and below rates for taxable bonds (investors are
willing to buy bonds at lower rates due to federal and state tax-exempt status)
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Up to $10
million available for real estate acquisition, construction, renovation,
machinery and equipment
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Maturities of up
to 30 years based on use of funds
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Issuance through
the local Development
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Authority allows
access to lower rates
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Can be used as
part of a lease agreement with a public or private development organization
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Availability of
funds not limited to areas with high degrees of economic need
Requirements
The total of IRB
financed and non-IRB financed capital expenditures for a new project cannot
exceed $10 million over a three year period (or the bonds become taxable)
Total outstanding
IRB issues (for all of a corporation’s projects in all locations) cannot exceed
$40 million
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Issuance costs
are higher than closing costs on conventional loans
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Processing/approval time greater than that for taxable bond or conventional
financing
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Issuance costs
may offset savings created by tax exempt status in cases of small issues or in
cases where capital expenditures end up exceeding $10 million over a three
year period and bonds become taxable
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Availability
subject to state-by-state cap
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Cannot be
utilized to acquire used buildings unless building rehabilitation will amount
to at least 15% of the bond issue
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Cannot be used
for working capital
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Bank letter of
credit often required to access the lower rates
Contact Mr. Kip Purvis, President
Meriwether County Development Authority
Phone: (706) 655-2558 Fax (706) 655-2812
email: kippurvis@alltel.net
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