Through the Development Financing program, NIFA encourages 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.
Eligible projects for development financing or industrial development bond financing generally include land, buildings or other improvements, or real or personal property (new or existing), used in connection with the activities listed below. No more than 25% of the bond proceeds may be used to acquire land or an interest in land. In the descriptions below, non-profit entities are those created for purposes unrelated to the operation for profit; i.e., no part of the income is distributable to its members, directors or officers, such as non-profit corporations created in accordance with Nebraska law. In order for interest on the bonds to be tax-exempt for federal income tax purposes, such non-profit entities must qualify as a 501(c)(3) corporation under federal law.
The types of projects that may be financed generally include the following:
Typical steps of the bond financing process, when NIFA is the issuer, are as follows:
Parties interested in financing a project through NIFA are encouraged to complete and submit the NIFA application form. The application must demonstrate that the proposed project meets all eligibility requirements by providing information that shows:
The NIFA Board of Directors has adopted Industrial Development Bond (IDB) Private Activity Cap Guidelines. The guidelines were adopted on May 29, 1998, and amended on December 14, 2001. They are included in the Application form below.
All development financing projects that would constitute a private activity bond must obtain a volume cap allocation, regardless of the issuer, using the form below.