TAX-EXEMPT FINANCING MARKET
IFA has statewide authorization to issue tax‑exempt qualified 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 qualified 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 qualified 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.
ABOUT QUALIFIED PURPOSES
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 facilities, surface freight transfer facilities, broadband projects and carbon dioxide capture facilities are among the qualified purposes for other conduit borrowers. Tax-exempt financing permits terms of up to 40 years and allows financing of up to 100% of all project and closing costs.