Industrial Revenue Bonds

Borrowing Costs Below Conventional Financing

Since the EDC's inception in 1990, a core part of our organization has been the Industrial Revenue Authority of St. Charles County. Over the past 40 years, we have helped hundreds of St. Charles County organizations access over a billion dollars in financing for eligible projects. View Brochure

years of experience issuing IRBs

$Billion+

in financing issued

organizations impacted

jobs created or retained

The EDC works with the Industrial Development Authority of St. Charles County to issue Tax-Exempt Industrial Revenue Bonds for qualifying projects. The IDA issues these tax-exempt revenue bonds for long-term, fixed-asset financing at below-market interest rates to finance qualifying projects in St. Charles County.

Manufacturing

Non-Profit 501(c)(3)

Special Taxing District

Multi-Family Housing (income guidelines)

BENEFITS OF A TAX-EXEMPT BOND

Competitive interest rates compared to conventional financing
Fast, streamlined, local application and approval process
Less invasive than other types of bond financing
Easy to overlay other incentives such as CID and TIF bonds
Allows for a longer maturity on bonds (compared to the 20-year limit on CID bonds and the 23-year limit on TIF bonds)
Few tax limits, no volume cap allocation or capital expenditure limits
Three to six-month timeline on average, from application to closing

PARAMETERS AND CONDITIONS

The following is a general list of parameters and conditions that apply to all tax-exempt industrial development bonds:

Tax-exempt industrial revenue bonds (IRBs) can only be used for items subject to an allowance for depreciation (i.e., 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 that is used in the manufacture 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 the acquisition of land.
Not more than 25% of the Net Bond Proceeds may be used for ancillary manufacturing purposes. These 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 AND MAXIMUM SIZE

There is no statutory minimum project or IRB 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 million unless the bonds are to be purchased by a bank. (See Mini-Bond Program)
Regarding the bond maximum, the borrower must represent it will not spend more than $10 million (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 that not more than $40 million (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.

ISSUANCE/DOCUMENTATION FEES

Fees due to the Authority at the time of Initial First 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 the 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 the time of any Subsequent Authority Issuance of Bonds: One-fourth of one percent (1/4 of 1%) of the face amount of the bonds

FEES AND OTHER EXPENSES

Fees due to the Authority at the time of application for the initial bond issue: $1,000 non-refundable application fee
All legal fees and other expenses incurred by the Authority are the responsibility of the bond obligor,
In the event there is no issuance of bonds, the applicant shall be required to pay for all expenses incurred by the Authority for work done on behalf of the applicant.

BOND FINANCING STEPS

Tax-exempt bond financing typically follows the steps below. However, each issuance is unique, and procedures may vary depending on individual circumstances.

Applicant decides to purchase, construct, or renovate a qualified project within St. Charles County (the “Project”).
Applicant consults with IDA or Bond Counsel who determines that the Project qualifies for financing under federal and state laws and that the interest on the Bonds will be exempt from state and federal income tax.
Applicant obtains a commitment to purchase or place the bonds with a bank or investment banking firm which structures credit requirements.
Applicant completes and files an application requesting the IDA to issue its bonds in an amount estimated to cover the eligible costs of the Project.
Bond Counsel prepares a preliminary opinion with respect to the availability of the bond financing for the Project.
Notices of a special meeting of the IDA are published.
The IDA holds a special meeting on the Project, and if the application is in order, adopts a resolution approving the application.
The applicable governing authority(ies) for the jurisdiction in which the Project is located meets and adopts a resolution/ordinance approving the bond issue.
Bond Counsel prepares bond documents and a final resolution authorizing the issuance of the bonds.
The bond documents are reviewed by all parties to the transaction and revisions are circulated until all documents are finalized.
A bond allocation application is submitted to the Missouri Department of Economic Development.
Notices of a TEFRA hearing are published.
The TEFRA hearing is held by the IDA.
Financing documents are prepared and the final resolution authorizing the issuance of the bonds is adopted by the IDA.
All parties meet to execute the bond documents and close the bond issue. At closing, the bond proceeds are deposited into a special account to be requisitioned by the borrower to pay for the costs of the Project.