Through the Development Financing program, NIFA seeks to encourage the investment of private capital in order to stimulate economic activity, create jobs, provide adequate health care facilities and expand the tax base throughout the state. NIFA does this primarily by providing technical assistance to project participants for financing through tax-exempt issuers such as counties and cities.
Tax-exempt issuers, such as NIFA, cities, and counties, have the authority to issue revenue bonds or other debt instruments to raise funds used to finance eligible development projects. The bonds must meet certain federal and state law requirements, if the interest they bear is intended to be tax-exempt from federal and state income taxes. The bond issues are repaid from the proceeds received by the issuer from the borrower under a revenue agreement (i.e. lease, loan agreement or installment sale contract). The issuer does not use any of its own funds to pay principal, interest or other costs incurred in connection with the financing.
Under the Development Financing program, the borrower seeking financing must find its own lenders (bond purchasers) either by direct placement with a financial institution or by public sale using an investment banker. Interest rates are negotiated between the borrower and lender/investment banker. These rates are usually lower than those available through commercial sources because of the tax-exempt status of the bonds. Generally, the maximum bond amount is $10 million, unless the project qualifies as an "exempt facility" such as solid waste facilities, non-profit hospitals or non-profit nursing homes.
Industrial Development Bond (IDB) presentation (.pdf-138KB)
List of past IDB projects