Financial Assistance - Industrial Revenue Bonds         Tax-exempt industrial development bonds are a means of financing certain types of capital assets or improvements at a borrowing cost below the cost of conventional financing. This method of financing is created by statutes (both Federal and State of Missouri) and thus a number of restrictions apply. Industrial Revenue Bonds Fact Sheet Eligibility The following is a general list of parameters and conditions that apply to all tax-exempt industrial development bonds. •  Tax-exempt industrial development bonds (IDB's) can only be used for items that are subject to an allowance for depreciation (Capital expenditures). In addition, assets financed with tax-exempt bonds must be used with respect to a manufacturing facility. •  A manufacturing facility is any facility, which is used in the manufacturing or production of tangible personal property (including the processing resulting in a change in the condition of such property). As a rule, a facility can qualify if the activity that occurs at the site involves taking two or more components and combining or assembling them to create something new. •  95% of the Net Bond Proceeds (par less any bond reserve amount) must be used for the acquisition, construction, reconstruction, equipping, or improvement of land or property which is subject to an allowance for depreciation as provided in the tax code. •  Not more than 25% of the Net Bond Proceeds may be used for acquisition of land. •  Not more than 25% of the Net Bond Proceeds may be used for ancillary manufacturing purposes. Ancillary purposes include the cost of areas such as materials storage, R & D labs, show rooms, employee parking lots, non-manufacturing related office space, and other similar areas. •  When purchasing an existing facility, amounts spent on rehabilitation or renovation must equal at least 15% of the cost of the bond-financed portion of the building. The borrower must spend this amount within two years of acquiring the facility. •  Costs of issuance paid from Bond Proceeds are limited to 2% of par. Any costs above 2% must be paid from available cash on hand or taxable borrowing. Project Minimum, Maximum There is no statutory minimum project or IDB size. Due to the costs associated with underwriting bonds, however, it is not practical, as a general rule, to use bonds to finance projects less than $1,000,000 (see Mini Bond program), unless the bonds are to be purchased by a bank. Regarding the bond maximum, the borrower must represent that it will not spend more than $10,000,000 (including the face amount of the IDB under consideration) for capital improvements within its local jurisdiction during the prior three year period and during the subsequent three year period. A second representation is required in that not more than $40,000,000 (including the IDB under consideration) in tax-exempt financing will occur in the aggregate, regardless of location, during the three year period subsequent to the later of a) date this facility is placed in service or b) the issuance of the Bonds. TOP Timing of Projects You must obtain a preliminary approval from The Industrial Development Authority of St. Charles County, Missouri before making any expenditures for which you will later reimburse yourself from the proceeds of the loan. The Authority's loan may not be used to reimburse you for any prior expenditures which you have made before the date of such preliminary approval. Purchaser of Bonds You must make arrangements to find a purchaser for the bonds. Typically, bonds are purchased by a bank, or are placed publicly or privately by an underwriter. Usually all of the financial terms of the bond issue, such as the repayment terms, the collateral, any guarantees and all financial covenants are negotiated between the borrower and the bond purchaser. The Authority has a policy regarding any bonds that are to be made available for purchase by the general public. To obtain a copy of the policy, please contact The Industrial Development Authority of St. Charles County directly. Issuance Fees Fees due to the Authority at Time of Initial 1st Authority Issuance of Bonds: One-half of one percent (1/2 of 1%) of the face amount of the bonds Fees due to the Authority at Time of Second Authority Issuance of Bonds: One-fourth of one percent (1/4 of 1%) of the face amount of the bonds Fees due to the Authority at Time of Any Subsequent Authority Issuance of Bonds: One-fourth of one percent (1/4 of 1%) of the face amount of the bonds. Applications Fees Fees due to the Authority at the time of application for initial bond issue: $1,000 non-refundable application fee Legal Fees and Other Expenses All legal fees and other expenses incurred by the Authority are the responsibility of the bond obliger, In the event there is no issuance of bonds, applicant shall be required to pay for all expenses incurred by the Authority for work done on behalf of the applicant. TOP Back to Financial Assistance Economic Development Center 5988 Mid Rivers Mall Dr. Suite 100, St. Charles, MO 63304 Phone: 636.441.6880, Toll Free: (877) 441-6880, Fax: 636.441.6881 E-mail: info@edcscc.com Site Concept and Design ©2010 / Maintenance and Hosting provided by jWeb.