Revenue Bond Program for Manufacturers

VEDA acts as a conduit issuer, thereby enabling eligible borrowers to access the tax-exempt market. Revenue bonds are generally appropriate for qualified projects in excess of $1 million; The maximum amount of tax-exempt bonds that can be issued for any project is $10 million.

Eligibility

  • Manufacturers engaged in the production of tangible personal property;
  • Total capital investment cannot exceed $20 million in the project municipality during the period including the three years prior to, and the three years following, the date of issue; and
  • Federal tax code provisions must be complied with to assure eligibility for tax-exempt financing; please contact VEDA for more complete information.

Use of Proceeds

  • Must be used for the acquisition of capital assets directly related to manufacturing, including:
    • Land acquisition, up to 25% of bond proceeds;
    • Construction of new manufacturing facility;
    • Purchase of new equipment;
    • Purchase of existing real property, provided that at least 15% of the bond amount will be spent for renovations within 24 months of the date of bond issuance; and
    • Refinancing is not an eligible use of funds.

Bond Terms

  • Payment terms and security requirements are negotiated between the borrower and the bond purchaser.  The bonds are not guaranteed by the State of Vermont or VEDA; therefore, marketability of the bonds is based on the creditworthiness of the user company; and
  • The bonds may be sold through a public offering or privately placed with financial institutions (usually banks) or other institutional investors.

Fees

  • Issuance fees are:
    • 0.625% of the bond face amount;
    • 0.25% for refunding issues; and
  • Borrower is also responsible for bond and issuer counsel fees incurred in connection with the issuance of a bond.

Application Process

  • All applications must be considered by the VEDA Board for approval.  This is a two-step process:
    • Preliminary approval (Inducement) must be obtained before any significant project expenditures are made; and
    • Final approval may be granted when applicant has received permits for the project and bond documents have been finalized.
  • Applications may be downloaded or obtained at the VEDA office; and
  • Applicants are advised to discuss their proposed project with VEDA staff prior to submitting the application.

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