Applications for Large Projects Sought
MONTPELIER, VT – The Vermont Economic Development Authority (VEDA) has announced that additional tax-exempt bond issuance capacity may be available under the Recovery Zone Facility Bond (RZFB) Program, created by the American Recovery and Reinvestment Act (a.k.a. the Stimulus Act), enacted by Congress in 2009.
“Thus far, VEDA has preliminarily committed all of Vermont’s $135 million in special tax-exempt bonding capacity under the Stimulus Act,” said VEDA Chief Executive Officer Jo Bradley. “However, there is no guarantee that every project approved earlier this year will succeed in finalizing all project details before the December 31, 2010 bond commitment deadline. Therefore, since it is vitally important that Vermont make the best and highest use of every dollar in tax-exempt bond issuance capacity allotted by the federal government, VEDA is inviting additional proposals, in case excess bonding capacity suddenly becomes available.”
Financing a project with tax-exempt bonds enables borrowers to make needed investments at the lowest possible cost, borrowing at a lower-than-normal interest rate. This financing vehicle is appropriate for larger projects, involving capital assets. Project funds may be used for the acquisition of machinery and equipment, the construction of new facilities, and in some cases, the purchase and renovation of existing real estate. Projects should total at least $2 million to make this type of financing cost effective for borrowers. Refinancing and working capital are not eligible uses.
All of Vermont was designated a Recovery Zone by Governor James Douglas, so eligible and qualified projects may be located anywhere in the state. A qualified business is any trade or business (including some non-profits), except those engaged in the rental of residential property and certain other prohibited facilities such as golf courses, country clubs, gambling facilities and liquor stores.
All applications for RZFB financing must be reviewed and approved by the VEDA Board. This review is a two step process. First, preliminary approval (Inducement) must be granted before any significant project expenditures are incurred. The most qualified applicants will have their proposals presented to the VEDA Board for Inducement approval. VEDA acts as a conduit issuer for RZFBs, and neither VEDA nor the State of Vermont guarantees payment of the RZFBs. The ability to sell these bonds is based solely on the creditworthiness of the borrower. Borrowing terms such as interest rate, amortization, collateral and required equity contribution are negotiated on a case-by-case basis between the borrower and the bond purchaser.
Recovery Zone Facility Bond inducement applications may be downloaded from the VEDA website, or obtained from VEDA’s office by calling (802) 828-5627. For more information about the program, businesses may contact any of VEDA’s Commercial Loan Officers at (802) 828-5627.
VEDA’s mission is to promote economic prosperity in Vermont by providing financial assistance to eligible businesses, including manufacturing, agricultural, and travel and tourism enterprises. Since its inception in 1974, VEDA has made financing commitments totaling over $1.5 billion.