Capital Lease Financing

The Lake Development Authority is designed to promote economic development by assisting capital investments made by public, private, or nonprofit entities. Port Authority projects include infrastructure projects, land acqusition, construction projects and renovation of existing buildings.

A Capital Lease financing transaction enables the borrower to take advantage of sales tax savings while still enjoying the benefits of ownership. The Port Authority must have an ownership interest in the project to be constructed allowing it to pass its benefit of State and Local sales tax exemption on to the project. The Port Authority issues bonds which may be purchased by banks, private investors or by an affiliate of the borrower. Lease payments are designed to fully amortize the debt. Construction costs are reduced and a buyout option allows the company to buy the asset at a nominal amount at the end of the lease term and/or when Bond proceeds are paid off.

Sales tax exemption financing

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exempt
financing

As a Port Authority, Lake Development Authority is not required to pay certain state and local sales taxes on construction materials to construct projects owned by the Port Authority. Please see “Capital Lease Financing” for further details.

Tax exempt financing lowers the borrower’s project costs because Bond investors and other lenders accept a lower interest rate on tax exempt Bonds. Lake Development Authority is an eligible issuer of tax-exempt Bonds. 501(c)3 non-profit organizations can utilize the Port Authority for tax exempt financing for capital improvements as long as their project satisfies federal tax rules.

Bank qualified bonds

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Bank-qualified bonds were created in 1986 to encourage banks to invest in tax-exempt bonds from smaller, less frequent municipal bond issuers, and to provide municipalities and other qualified borrowers with access to lower cost borrowing in order to provide services and capital projects.

Qualified issuers issuing $10 million or less in bonds per calendar year can designate those bonds as bank-qualified, which allows them to sell their tax-exempt bonds directly to local banks, providing lower financing costs to the borrower.

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