PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY (PEDFA)

Transcription

1 1

2 PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY (PEDFA) Type of Assistance Tax-Exempt and Taxable Bond financing program. Provides financing for most kinds of projects at attractive interest rates. Eligible Applicants Most businesses in Pennsylvania. Manufacturing, 501(c)(3) Nonprofit, and Exempt Facility projects generally qualify for tax-exempt treatment. Tax-exempt eligibility must ultimately be determined by Bond Counsel. Structure of Financing: Composite Pool: Up to approximately $10 million. All projects are backed with a letter of credit from a bank. Process is standardized and on set schedule. Variable interest rate. Pools fund in April, August and December. Eligible Uses of Funds Land and building acquisition, construction, rehabilitation, equipment closing costs. Certain conditions also apply to tax-exempt funds. Taxable projects can also fund working capital. Applying for PEDFA Must apply through a local Industrial Development Authority (IDA) or Industrial Development Corporation (IDC). Questions Contact CPF at (717) Stand-Alone: Projects approx. $10 million and up. Each project has its own structure and timetable. 2

3 Recovery Zone (RZ) Bonds Overview RZ Bonds - History and Applicable Laws Types of Recovery Zone Bonds Allocation of RZ Cap Bond Re-allocation of RZ Bond Cap Timelines and Forms Contact Information 3

4 Recovery Zones Applicable Law Recovery Zone bonds were authorized in HR 1 (the American Recovery and Reinvestment Act of 2009 ) IRS Notice and

5 Recovery Zone Economic Development Bonds A sub-category of Build America Bonds (BAB) for public infrastructure and facilities in areas designated by state and local governments as areas with: a) significant poverty, unemployment, or home foreclosure rates, b) federally designated empowerment zones and renewal communities, and c) areas negatively impacted by military base closures. Option to issue as tax credit bond or direct pay taxable bond BAB benefit to borrower is a 45% direct subsidy from the US Treasury on interest payments Proceeds must be used for a qualified economic development purpose defined as Capital expenditures paid or incurred with respect to property located in a recovery zone, including Land Buildings Equipment Expenditures for public infrastructure and construction of public facilities 5

6 Recovery Zone Economic Development Bonds Proceeds can NOT be used for private activity No refundings or refinancings new money only Issuance costs limited to 2% of proceeds Davis-Bacon wage and benefit requirements apply US allocation of $10 billion allocated among the States in proportion to their relative 2008 job losses Suballocations to counties and large municipalities within a State also made on the basis of relative job losses Must be issued by 12/31/10 6

7 Recovery Zone Facility Bonds A new category of tax-exempt private activity bonds for financing economic development in recovery zones: a) significant poverty, unemployment, or home foreclosure rates, b) federally designated empowerment zones and renewal communities, and c) areas negatively impacted by military base closures Used to finance new capital improvements owned and used by almost any: Industrial Commercial Retail Office Or other business activity located in a recovery zone Exceptions are rental housing, airplanes, health clubs, liquor stores, race tracks, luxury boxes, gambling massage parlors etc. 7

8 Recovery Zone Facility Bonds Issued for private projects No refundings or refinancings new money only Debt service is funded by the private business that owns and uses the property Interest is tax-exempt (this is the sole subsidy) No cash subsidy from Treasury US allocation of $15 billion allocated among the States in proportion to their relative 2008 job losses Suballocations to counties and large municipalities within a State also made on the basis of relative job losses Must be issued by 12/31/10 8

9 Designation of Recovery Zone Recovery zones are designated by resolution/ordinance of the municipality/county receiving an allocation Option A Early adoption of a resolution/ordinance designating the entire community (or significant portion) as a Recovery Zone Option B Designate Recovery Zone as projects become known Designating the zone should generally not be a barrier to use For Recovery Zone Facility Bonds - only expenditures incurred after a Recovery Zone is designated can be reimbursed For Recovery Economic Development Bonds ordinary reimbursement ( inducement ) resolution rules apply Form resolution/ordinance will be available on our website soon Local governments should consult with bond counsel 9

10 Recovery Zone Allocation Pennsylvania RZED Allocation $154,008,000 Pennsylvania RZFB Allocation $231,012,000 Sixty-three counties and 4 cities received an allocation Allocation designees may: Issue bonds Authorize an eligible public entity to issue bonds Allocate all or a portion to a political subdivision within its jurisdiction (such as a city in a county) 10

11 Recovery Zone Allocation Short issuance period for RZBs Some counties or large local governments may not use all of their allocation; therefore, asking to waive to state Some counties and large local governments may have large-scale, viable economic development projects The reallocation process will assure maximum use allocation across the state 11

12 Recovery Zone Allocation Waiver Process Each allocation designee may waive all or part of its allocation to the state for reallocation Waiver forms must be submitted to the Center for Private Financing by July 1 st, 2010 Waiver forms can be found on the Department s website under the Center for Private Financing A Notice of Intent to Issue form must be submitted to the Center for Private Financing if an allocation designee plans to issue RZBs Forms and procedures for reallocating RZ Bond cap within a County or City should be established 12

13 Recovery Zone Waived Allocation Recovery Zone allocation returned to the State: Re-allocate waived allocation to local governments that have viable projects (that will close by years end) The state, through the Pennsylvania Economic Development Financing Authority (PEDFA) can issue bonds for viable projects across the state Local governments who initially waive their allocation are eligible to apply for re-allocation September 1 st, 2010 is the deadline for requesting waived allocation 13

14 Recovery Zone Re-allocation Process Send a letter to the Center for Private Financing requesting waived allocation Amount of waived allocation being requested Estimated Closing Costs Project Name Name of Issuer Site location Project Narrative Underwriter Bond Counsel Re-allocation will be given to projects on a first-come, first-serve basis 14

15 Recovery Zone Bond Allocation Usage The Center for Private Financing will track Recovery Zone allocation Issued at the local level Waived to the State Re-allocated by the State 15

16 Timelines and Forms: Key Dates November, 2009 notice to all local governments of RZ allocation July 1, 2010 deadline for submitting waiver form waiving allocation to the state September 1, 2010 last day to apply for RZ reallocation December 31, 2010 last day to issue RZ Bonds 16

17 CONTACT INFORMATION Center for Private Financing Webpage at (On the main page of the website, click on Build Your Business: Start: Expert Assistance: Center for Private Financing) OR Center for Private Financing Department of Community and Economic Development 400 North Street, 4 th Floor Harrisburg, PA (717)