- These bonds are a new category of tax-exempt bonds.
- Must be issued before Jan. 1, 2013.
- Bonds must be designated by the Governor of Indiana (with a $3 billion limit applicable to Indiana, which may be allocated among the eligible counties as the Governor determines).
- Bonds must be for projects in one of the following 39 counties (which suffered tornadoes, flooding or severe storms and as a result were declared major disaster areas by the President of the United States during the period from May 20, 2008, through July 31, 2008).
- For privately owned projects, the private user must have suffered a loss due to the weather disaster leading to the disaster area designation, OR the Governor must find that the user’s project replaces a project that suffered such a loss.
- For public utility property, the project must consist of reconstruction or repair of property damaged by the weather disaster that led to the disaster area designation.
- Mortgage financings are permitted for mortgagors who suffered loss of their principal residence as a result of such weather disaster.
PROJECT COSTS THAT MAY BE FINANCED:
- Low-income residential rental projects
- Public utility property
- Non-residential real property and fixed improvements
- NOT equipment, movable fixtures, inventory or working capital
OTHER GENERAL REQUIREMENTS:
The following requirements applicable generally to tax-exempt exempt facility bonds also apply to Midwest Disaster Area Bonds:
- Bond maturity limitation (the average life of the bonds may not exceed 120 percent of the average life of the assets being financed).
- Issuance costs financeable with bonds limited to 2 percent of bond amount.
- No more than 25 percent of bond proceeds can be used for land acquisition.
- Acquisition of existing buildings is subject to certain rehab expenditures.
- Reimbursement resolution rules apply.
- No portion of the bonds can be used for certain prohibited projects (including airplanes, skyboxes or other luxury boxes, health club facilities, golf courses, country clubs, massage parlors, hot tub facilities, suntan facilities, racetrack or gambling facilities, or liquor stores).
- Bonds may not be designated as “bank qualified.”
- At least 95 percent of the bond proceeds must be used for the eligible project costs.
- Straight-line depreciation is required.