Private Activity Bonds

IFA has statewide authorization to issue tax‑exempt private activity bonds to fund qualified purposes (see below) for 501(c)(3) organizations and other conduit borrowers.

Interest on tax‑exempt financing is generally well below the rates charged in either traditional bank financing or the taxable capital markets. Because interest paid to bondholders on tax-exempt private activity bonds is not includable in their gross income for federal income tax purposes, bondholders are willing to accept a lower interest rate than they would accept if the interest was taxable. Special rules apply to bonds that are private activity bonds for those bonds to be tax-exempt private activity bonds.

501(c)(3) organizations and other conduit borrowers that utilize IFA are afforded the opportunity to work with banks, underwriters or placement agents of their own choosing and to assemble the team of professionals desired for any potential qualified purpose throughout Illinois.

Tax-exempt financing can be used by 501(c)(3) organizations and other conduit borrowers to finance or refinance certain capital expenditures known as qualified purposes under federal tax law. Qualified purposes for 501(c)(3) organizations generally include facilities such as hospitals, healthcare systems, continuing care retirement communities, universities, colleges, PreK-12 schools, student housing, museums, and cultural institutions. Small manufacturing facilities, water furnishing facilities, solid waste disposal and recycling facilities, sewage facilities, surface freight transfer facilities, broadband projects, and carbon dioxide capture facilities are among the qualified purposes for other conduit borrowers. Moreover, subject to certain limitations, the equipping of such facilities and working capital are qualified purposes. Tax-exempt financing permits terms of up to 40 years and allows financing of up to 100% of all project and closing costs.

Application forms are available for download at the link posted below. Contact Sara Perugini, Senior Vice President (sperugini@il-fa.com) for requests with respect to hospitals, healthcare systems, and continuing care retirement communities. Contact Brad Fletcher, Managing Director (bfletcher@il-fa.com) for requests with respect to other conduit borrowers and for general inquiries of the Public Finance Group.

IFA has designated John Prendiville, Senior Counsel (jprendiville@il-fa.com) as the primary contact for receipt of disclosures made by underwriters in compliance with Municipal Securities Rulemaking Board Rule G-17. In doing so, IFA respectfully requests that underwriters copy either Sara Perugini or Brad Fletcher as appropriate.