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5 <br />4) Bonds used for Development <br />By state law cities can issue bonds. These debt instruments can be taxable or <br />tax-exempt. Not all bonds are general obligation. Pure revenue bonds are also <br />common, especially for development. Bonds can be used to pay project costs and <br />for the first two or three years of interest payments. This reduces the need for <br />short-term revenue. There are several types of bonds the City could consider in <br />its toolbox: <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 bonds <br />and becomes the legal owner of the asset (e.g. building). The City then <br />leases back or sells the asset to the company. The firm’s repayment <br />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. Sometimes <br />called “housing revenue bonds”, these bonds are not general obligation <br />bonds backed by the full faith and credit of the City. Revenues <br />generated by the project pay the bond and can be used for a variety of <br />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 the <br />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 /> <br />5) Ramsey County Business Loan Program <br />The Ramsey County Business Loan Program provides gap financing that can be <br />used in conjunction with other private and public funds. <br /> <br />Who can apply: <br />In general, loans are restricted to commercial, industrial, or service oriented <br />businesses located in or moving to Ramsey County. In addition, businesses must <br />be registered to do business in the State of Minnesota and demonstrate a need for <br />public financing. <br /> <br />How does the program work: <br />Loans are typically made for the purchase of capital equipment, land and building <br />acquisition, and building rehabilitation or new construction. Application fees are <br />low, and rates and terms are more flexible than the market. Loans of up to <br />$250,000 are provided. To request an application, or to obtain more information,