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• and for the first two or three years of interest payments. This reduces the need <br /> • for short-term revenue. There are several types of bonds the City could consider <br /> for development projects: <br /> a) Revenue Bonds. Various bonds used to finance industrial, commercial <br /> and medical facilities, multifamily rental housing, nursing homes and <br /> some nonprofit activities. <br /> b) Industrial Revenue Bonds. Allows cities to issue tax-exempt bonds to <br /> finance fixed assets. In the typical transaction, the city issues the <br /> bonds and becomes the legal owner of the asset (e.g. building). The <br /> City then leases back or sells the asset to the company. The firm's <br /> repayment coincides with bond payback. <br /> c) Essential Function Bonds. Certain types of economic development are <br /> considered by the state to be "essential functions" of a city. <br /> Sometimes called "housing revenue bonds", these bonds are not <br /> general obligation bonds backed by the full faith and credit of the City. <br /> Revenues generated by the project pay the bond and can be used for <br /> a variety of housing options (market and nonmarket rate). <br /> d) Common Bond Revenue Bonds. State and local governments may <br /> issue tax-exempt or taxable revenue bonds on behalf of private <br /> borrowers to provide lower interest rates on long-term financing. In <br /> general, manufacturing, medical facility, nonprofit or nursing home <br /> projects are eligible for tax-exempt revenue bonds and those issued for <br /> • commercial projects are taxable. Bonds issued through the Common <br /> Bond Fund are investment-grade instruments with a rating based on <br /> the security provided by the fund. <br /> e) Bank Qualified Bank Direct Tax-Exempt Loans. These are cost- <br /> effective tax-exempt financing for capital projects for small <br /> manufacturing companies and nonprofit organizations. <br /> 5) Business Improvement Partnership Program <br /> The City's Economic Development Authority has a vested interest in helping <br /> Mounds View businesses thrive and prosper while improving the aesthetics of <br /> the commercial, industrial, and retail sectors of the community. Accordingly, the <br /> Mounds View Business Improvement Partnership Program has been established <br /> to partner with local businesses by providing 2% interest loans for exterior and <br /> interior building improvements. <br /> Who can apply? <br /> Any business owner with a facility or property located in Mounds View. <br /> How does the program work? <br /> The City's Economic Development Authority, in partnership with local banks, will <br /> provide improvement loans to existing Mounds View businesses at a minimum of <br /> $10,000 and a maximum of $50,000. The City participates by providing half of <br /> • the loan amount at a 2% interest rate. <br /> April 2007 Draft <br /> Mounds View Business Toolbox <br /> Internal Document <br /> Page 7 of 9 <br />