| Industrial Development Revenue Bond
(IDRB) |
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| County Policy: |
MANATEE COUNTY, FLORIDA |
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POLICIES GOVERNING CONSENT TO ISSUANCE |
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OF INDUSTRIAL DEVELOPMENT REVENUE BONDS |
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OR ENTERPRISE FLORIDA BONDS |
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FOR MANATEE COUNTY PROJECTS |
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The Board of County Commissioners of Manatee
County, Florida, reserves the right to review each application for financing
and provide consent to issuance based upon the best interests of the
County. The determination shall be
based upon review of the application and such other information as may be
requested or provided by the applicant for such financing and shall include,
but not be limited to consideration of: |
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1) |
Environmental impacts |
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2) |
Jobs created |
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3) |
Relationship to economic development programs (e.g., location in
enterprise zone, employment programs, etc.) |
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4) |
Additional economic impacts (use of County services and
resources) |
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5) |
Nature of commitment owners and developers of the project are
prepared to make to secure the commitment to provide benefits to Manatee
County (existing contracts, pledges to include County enterprises in
solicitation for goods and services for the development and operation of the
project, historical preference of company, etc.) |
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6) |
Impact on public services and facilities (the ability of the
County to provide necessary services and facilities, utilities, etc.) |
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7) |
Consistency with the County’s lands development code and the
likelihood of obtaining zoning and land use and development approvals |
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8) |
Any
other matter having an impact upon the County or State |
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The County Administrator is directed to provide
procedures for the review of applications, including coordination of the
review with the Economic Development Council of the Manatee Chamber of
Commerce. |
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| WHAT ARE
IDRB’S: |
Industrial Development Revenue Bonds are debt
instruments issued through a local
governmental agency to a private business for acquiring or constructing
capital facilities for use in a manufacturing facility. The debt service on the bonds is paid
solely by the company. |
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In its simplest form, IDRB financing may be
compared to ordinary note and mortgage financing, i.e., a private lender
(bank) or other financial institution agrees to lend funds (buy bonds) to a
private company. The facilities
(capital project), which the lender’s funds are used to finance, are
mortgaged to secure the payment of the loan (bonds). The interest is tax free to the lender who
therefore is willing to accept a lower interest rate than through
conventional financing. |
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| TARGET
USERS: |
Industrial
Development Bonds finance the cost of only manufacturing companies (generally
at least three years old) that will create new jobs |
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The Players - “public-private partnership” |
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1) |
Government entity issuing the bonds |
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2) |
Private
sector lender (bank) or other financial institution |
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3) |
Bond counsel who drafts bond documents |
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Eligibility- |
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Borrower
must have capacity to obtain commercial bank credit |
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Financial
ratios consistent with commercial bank standards |
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Positive
financial trends for last three years |
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Favorable bank references |
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| LOAN TYPES: |
Plant Acquisition |
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1) |
For acquisition of land and buildings, construction of new
facility, and/or purchase of capital equipment |
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2) |
Amount: $1,000,000 to $10,000,000 (restricted by availability of
funds). |
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3) |
Terms - set by bank |
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4) |
Similar to conventional commercial real estate financing and
equipment financing |
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5) |
Five to 25-year amortization.
Bond maturity usually matches amortization period but may have call
options every five to ten years |
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6) |
Up to 100% financing depending on company’s financial strength,
nature of project and other conditions set by the letter of credit
underwriter |
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| HOW TO APPLY: |
Contact the Manatee County Economic Development
Program Manager for the current application requirements. The general requirements are listed below. |
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1) |
Prepare
loan request with the following information: |
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a) |
Dollar amount |
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b) |
Applicant’s background |
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c) |
Project description |
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d) |
Use of borrowed funds |
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e) |
Audited financial statements (if available) - past five years
and current interim. |
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f) |
Five-year financial projections |
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g) |
Economic Impact - indicate how the community will benefit by the
project, i.e., new jobs created, existing jobs preserved, new taxes,
additional payroll, etc. |
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2) |
Present Application to IDRB lender (bank) |
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3) |
Present application and payment of $6,000 ($1,000
non-reimbursable application fee and $5,000 deposit on County Attorney fees)
to Karen Stewart, Manatee County Government, 749,3029, ext. 6832 |
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4) |
County either approves or declines bond issuance. (i.e. requires
the consent of the Board of County Commissioners who review the project.) |
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5) |
Bank must also approve loan request |
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6) |
Bond counsel prepares bond documents |
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7) |
Bonds
sold to purchaser by bank's underwriting group |
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8) |
Time
frame: about 4 months for complete
process |
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| WHO’S NOT ELIGIBLE: |
1) |
Start-up businesses |
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| 2) |
Non-manufacturing companies |
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3) |
Manufacturers unable to demonstrate ability to service bond
payments |
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4) |
Companies who fail to meet the County policy requirements |
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| ADVANTAGES: |
1) |
Interest Cost Savings |
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Industrial Development Bonds are considered special obligations
of a governmental unit, and if the project meets qualifying conditions, part
or all of the interest may be exempt from federal income tax. Typically, the rates range from 50% - 60%
of the prime rate. This could offset
any costs incurred, and enable them to be recouped very quickly. |
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2) |
Up to 100% financing |
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| DISADVANTAGES: |
1) |
Length of time from start to finish of the application process,
may be longer than conventional financing |
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2) |
Due to the number of parties involved, legal disclosing costs
may be higher than conventional financing |
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3) |
Minimum issue is about $1,000,000 |
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4) |
Possible
reduced federal tax depreciation and tax credits |
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| Source: Manatee County, February 2010 |
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