Revenue bonds

Revenue bonds can be used to finance:

• Industrial, commercial and medical facilities
• Multifamily rental housing
• Nursing homes
• Some nonprofit activities

They can fund projects like:

• Land acquisition
• New-facility construction
• Additions to existing facilities
• Purchase and renovation of existing structures
• Production and equipment purchases

State and local government agencies may issue tax-exempt or taxable revenue bonds on behalf of private borrowers to provide lower interest rates on long-term financing.

• Revenue bonds for industrial/manufacturing, medical facility, 501(c)(3) nonprofit or nursing-home projects are generally tax-exempt
• Revenue bonds for commercial projects are taxable

Eligibility requirements

You can apply to this program if you are a:

• Business or business owner in Minneapolis
• Business owner or developer planning to locate in Minneapolis
• Business with facilities outside Minneapolis, primarily if they are Minneapolis-based firms with facilities both in and outside the city or for projects that serve a public purpose.
• Bars, restaurants, entertainment facilities and start-up firms are not eligible

Program details

• Revenue bonds are marketed to either institutional investors - insurance companies, banks and pension funds or sold to the general public through a public offering. This results in interest-cost savings to borrowers.
• Bond underwriting firms will prepare an official statement to market the bonds to the public.
• Revenue bonds are issued either free-standing or through the Minneapolis Common Bond Fund (CBF).
• Free-standing revenue bonds are issued with the strength of the project dictating terms and conditions of financing and interest rate.
• Bonds issued through the CBF are investment-grade with an "A+" municipal-bond rating based on the security provided by the CBF, resulting in lower interest rates.

Rates, terms and fees

• Revenue bond issuance expenses include bond counsel, underwriter, corporate counsel, inspecting architect, title insurance and other fees. These fees may be financed through the revenue bond up to certain limits.
• Tax-exempt revenue bonds can be issued below commercial market interest because interest earnings to the purchaser are generally exempt from federal, state and local income taxes.
• Revenue bond financing can be fixed rate, with terms of 20 to 30 years, often at interest rates below or equal to market interest.

Process

• A City of Minneapolis staff person will handle your revenue bond request from initial inquiry through post-closing monitoring.
• The complete public approval process takes about 90 days.
• The City of Minneapolis approve revenue bond projects based on financial strength; credit worthiness; public purpose served, such as preserving and creating jobs; and increasing the real estate tax base.

Application materials

• Narrative on the company and owner(s)
• Financial statements for the past three years and any interim statements
• Personal financial statements of anyone owning more than 20 percent of the company
• General description of the proposed project, plans and estimates of project costs
• Appraisals and environmental reports about the proposed project