Revenue Bond Program
Revenue bonds can be used to finance industrial, commercial and medical facilities, multifamily rental housing, nursing homes and some nonprofit activities. Projects can include land acquisition, new-facility construction, additions to existing facilities, purchase and renovation of existing structures and production-equipment purchase.
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 issued for industrial/manufacturing, medical facility, 501 (c) (3) nonprofit or nursing-home projects are generally tax-exempt; those for commercial projects are taxable.
Who is eligible for revenue bonds?
- Any owner or business in Minneapolis.
- Any business owner or developer planning to locate in Minneapolis.
- Businesses 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
How does the revenue bond program work?
- 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.
What are the 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.
What is the revenue bond 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.
What information do you need to provide?
- 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.
For more information, contact Charles Curtis at (612) 673-5079.
All programs and guidelines are subject to change without notice.
Online information from the City of Minneapolis at MinneapolisMN.gov/CPED
Last updated Jan. 29, 2013