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Industrial Revenue Bonds
Information for Applicants for Industrial Revenue Bond Financing
To carry out its goal of developing commerce and promoting the safety, health and welfare of those who live and work in Virginia, the Fairfax County Economic Development Authority (FCEDA) has the authority to issue revenue bonds to be used in financing the acquisition, construction or equipping of various types of facilities. In order to qualify, a facility must be one of the following: a non-profit 501(c)(3) entity or a for-profit "manufacturing facility," as defined by the Internal Revenue Code.
Interest on qualified bonds issued by the FCEDA is exempt from taxation under the Internal Revenue Code. The availability of this tax benefit generally results in a lower interest rate for the user of the borrowed funds. It is important to note that the revenue bonds do not constitute a general obligation of the FCEDA, nor will the full faith and credit of Fairfax County or the Commonwealth of Virginia be pledged to the payment of any such bonds.
The following information is provided to applicants for tax-exempt financing through bonds issued by the FCEDA. The FCEDA does not provide any funds for the financing of facilities. It is the applicant's responsibility to locate a source of funding. The applicant can do so either by applying directly to financial institutions or by using the services of an underwriter.
Furthermore, the FCEDA cannot guarantee that the bonds that it issues will qualify for exemption from taxation under the Internal Revenue Code. All applicants are strongly encouraged to seek the assistance of bond counsel early in the application process to assure that the bonds, once issued, will be exempt from taxation. The FCEDA does not render tax advice or opinions to applicants.
Steps in the Application Process
While there may be some variation in the timing and sequence of events leading up to issuance of the bonds, the process normally proceeds as follows.
- The applicant decides to acquire, construct, or renovate real property in Fairfax County.
- The applicant consults with bond counsel to determine eligibility for tax-exempt financing.
- The applicant begins to arrange for financing, either through a financial institution or through an underwriter.
- The applicant submits an application requesting the FCEDA to issue bonds.
- Staff and counsel to the FCEDA review the application for completeness. If the application is in order, the application is put on the agenda for a public hearing at the next FCEDA meeting (generally the third Tuesday of the month).
- A newspaper notice of the public hearing is published once a week for two successive weeks. NOTE: State law requires that the public hearing take place no fewer than six nor more than 21 days after the second notice appears in the newspaper. The FCEDA Commissioners meet on the third Tuesday of each month. Accordingly, in order to comply with state law, the notice of the public hearing on the application must be published in a newspaper of general circulation on or before the two Wednesdays immediately prior to the Tuesday date for the public hearing.
- The FCEDA conducts a public hearing at its regularly scheduled monthly meeting. Applicant makes a short presentation of the project to the FCEDA Commissioners. The FCEDA Commissioners vote on a resolution approving the application and recommending that the Fairfax County Board of Supervisors approve the issuance of the bonds.
- The Fairfax County Board of Supervisors adopts a resolution approving the issuance of the bonds. NOTE: State law requires that the Board of Supervisors' approval take place within 60 days of the public hearing by the FCEDA. The Fairfax County Board of Supervisors meets on Mondays that have been scheduled for the year.
- Simultaneously with the approval process outlined in Steps 7 and 8 above, bond counsel prepares the bond documents reflecting the financial transactions relating to issuance of the bonds. The documents are submitted to counsel for the FCEDA for review.
- The FCEDA adopts a final resolution authorizing the issuance of the bonds.
- Bond counsel conducts the bond closing. FCEDA officials execute bond documents in accordance with the terms of the resolutions passed by the FCEDA.
Applicants for revenue bond financing should use the application form to apply for IRB financing. Applicants must include the following documents:
- Completed Application.
- Statement of background information on the applicant. Please include a brief description of your organizational structure, your organization's history, the markets, products, and/or services you provide, and the relation of the project for which you seek financing to your organization's markets, products or services. You should provide sufficient information to provide the FCEDA with a good understanding of your organization and of your plans for facilities in Fairfax County and the ways in which your facility will promote the health, safety and welfare of Fairfax County inhabitants.
- Summary of the project to be financed. a. Provide a description of the facilities, which you plan to acquire, construct, improve, and/or renovate. Use of sketches, plans and photographs is encouraged. b. Provide a pro forma financial analysis of the project and of projected revenues for repayment of the bonds. Include a breakdown of all costs to be paid from bond proceeds for the land, site development, engineering fees, architecture fees, land use approval fee (e.g., zoning or permit fees), construction costs, bond discount or broker's fees, the costs of financing, and any other costs. Also include a detailed explanation of the projected revenues for repayment of the bonds.
- Completed fiscal impact statement. (Use sample form attached. Do not sign the form.)
- Applicant's financial statements for the past three years of operation and estimates for current year.
- Statement of Understanding executed by applicant for EDA revenue bond financing.
For more information on IRBs, contact Rodney Lusk at 703-790-0600 or by e-mail at email@example.com.