Local Government Bonds

Description: Local Government Bonds are those specifically issued through the Local Government Bond section of QCREDA’s statute. Local Government Bonds are generally exempt from federal income taxes; these bonds are also exempt from the alternative minimum tax. In addition, properly structured, these bonds can be secured by an intercept of state funding, further securing the bondholder.

Benefits: The benefits of Local Government Bonds include:
Long term – Maturity of the bonds is flexible and can range from ten to thirty years.

Low Interest Rate – Rates are generally 2.0% to 3.0% below Prime Rate. The interest rates are discounted to reflect Tax-Exempt status. Rates range well below conventional financing.

Flexible Terms – Interest rates may be fixed or variable and can finance up to 100% of the eligible project costs.

Favorable Terms – There is no fixed minimum job creation or capital investment requirements, although some jobs have to be created.
Local Government Bonds
Eligibility: Any unit of local government including school districts, park districts, library districts, cities, villages and townships as well as other statutorily established political subdivisions. Local Government Bonds do not require volume cap.

Fees: – A $2,000 non-refundable application fee is due when the application is submitted. An issuance fee of 15-40 basis points is due at closing along with an issuer counsel fee that ranges between $5,000-7,000 depending on the complexity of the bond. Costs of issuance funded from tax-exempt private activity bond proceeds are limited to 2.0%.

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