Tax-Exempt Financing
Looking to fund your next BIG move?
Alexandria’s Industrial Development Authority (IDA) helps qualified organizations access tax-exempt financing through their preferred lenders. Because the interest earned by lenders is exempt from federal income tax, they can offer lower interest rates, making it a cost-effective option for capital projects.
Whether you’re looking to build a new facility, expand your services, or relocate headquarters, our team can guide you through the process and help tailor a financing solution to meet your goals.
Have a project in mind?
See if you qualify.
- Headquarters and facilities for 501(c)(3) organizations
- Hospitals and other medical facilities
- Elementary and secondary schools
- College and universities
- Higher education facilities
- Parking structures
- Small-scale manufacturing facilities
- Pollution control infrastructure
Financing That Fits Your Needs
While applicants are responsible for covering all financial-related costs and securing a lender, tax-exempt financing offers flexibility similar to traditional loans. Choose between fixed or variable interest rates and set a repayment schedule that fits your cash flow. Rates can often be improved by credit enhancements or ratings. For publicly sold bonds, an underwriter will help structure the financing and ensure all credit and security considerations are addressed so you can stay focused on your mission.
Understand the Fees Upfront
The applicant is responsible for all legal fees and publication costs incurred during the application process. The IDA charges the administrative fees listed below, and projects typically must be at least $2 million to make tax-exempt financing cost-effective.
- Application fee of $3,500
- +3/4% of the first $5,000,000
- +1/2% of the amount over $5,000,000- $75,000,000
- +.4% of $75,000,0001 – $150M
- +.3% of issuances over $150M
Note: Different fees apply for refunding issues, taxable debt in conjunction with tax-exempt issues, and other actions and approvals.
How the Financing Process Works
Read on for a step-by-step explanation, timeline, and what to expect of a typical bond issuance process.
Of course each financing is unique, and the procedures and timeline may vary depending on individual circumstances and the complexity of the transaction.
Week 0
The Borrower decides to invest in a fixed asset within the City of Alexandria (the “Project”).
Week 1
The Borrower consults with the IDA staff and Bond Counsel who determines that the Project qualifies for tax-exempt financing.
The Borrower goes to a bank or investment banking firm and formally requests a commitment to purchase or place the Bonds.
The bank or investment banking firm analyzes the Project and the financial strength of the Borrower to repay the Bonds and, if it agrees to finance the Project, structures credit requirements.
Week 2
The Borrower completes and files the IDA’s Bond Financing application.
Week 3
The IDA schedules a public hearing on the proposed project.
The IDA’s Bond Counsel prepares a resolution to issue the bonds.
Week 4
The IDA’s Bond Counsel publishes a notice of public hearing with respect to the Project.
Week 5
The IDA holds a public hearing on the proposed Project and reviews the application and resolution issuing the bonds. If satisfactory, the Board approves the resolution.
The Borrower attends the public hearing to present the Project and answer any questions from the Board or public.
The IDA-approved resolution is provided to City of Alexandria staff, and the item is placed on the docket for the next City Council Legislative Meeting. The Project bond issuance must be approved by City Council within 1 year of Issuer Approval.
Week 7-9
City Council reviews the Project Bond Issuance, and if deemed satisfactory, passes a resolution approving the bond issuance.
Week 10-11
IDA’s Bond Counsel and Borrower’s Counsel finalize the Bond Documents.
Week 12
All parties meet to execute the bond documents and close the bond issuance.
Get Your Questions Answered
Who can apply?
Organizations, including 501(c)(3)s, as well as certain qualifying private entities undertaking eligible projects (like medical facilities, schools, or manufacturing) located in the City of Alexandria.
What projects qualify?
Projects that meet federal and Virginia legal requirements for tax-exempt financing, such as:
▪ Headquarters and facilities for 501(c)(3) charitable organizations
▪ Hospitals and other medical facilities
▪ Elementary and secondary schools
▪ College and universities
▪ Higher education facilities
▪ Parking structures
▪ Small-scale manufacturing facilities
▪ Pollution control infrastructure
How long is the process?
The typical bond review and issuance [process takes approximately 12 weeks.] This includes documentation, board review, public hearing, and bond closing.
What is the cost?
▪ Application fee of $3,500
▪ +3/4% of the first $5,000,000
▪ +1/2% of the amount over $5,000,000
Applicants also cover all legal fees and publication costs the IDA incurs. *Other costs may apply for refunding or taxable bonds.
How much can I borrow?
Typically, there is not a formal maximum, but the financing proceeds should reflect your project scope, meet eligibility requirements, and align with your lender’s terms.
Do you have a list of lenders?
A good first step is to reach out to your current banking relationship or those within your network as many lenders are familiar with tax-exempt financing. Reach out to our team if you’d like more information.
Ready to Get Started?
If your project aligns with the qualifications above, you’re already on the right track. Let’s talk about how we can support your next phase, whether that’s expanding, relocating, or building something entirely new in Alexandria.
