Tax-Exempt Financing Program

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Tax-Exempt Financing Program Summary

  • Provides private sector financing at lower than conventional interest rates to qualifying federally tax-exempt projects
  • Administered through the York County Industrial Development Authority (YCIDA) and the General Authority of Southcentral Pennsylvania (GASP)

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Tax-Exempt Project: Senior Presbyterian Living

Eligible Businesses

Tax-Exempt:

  • Manufacturing
  • 501 (c)3 organizations
  • Federally defined exempt facilities
  • Qualifying first time farmers (also known as Next Generation Farmer Loan Program)
  • All projects must qualify under federal tax laws

Taxable:

  • No restrictions

Uses and Purposes of Funding

  • Land and building acquisition
  • Building construction and renovation
  • Machinery and equipment
  • Closing costs, which are subject to a federal cap
  • Other uses as permitted by federal tax law

Amounts

Manufacturing and 501 (c)3 projects:

  • Up to $10,000,000, subject to federal capital expenditure limitations and allocation of federal volume cap

Other projects:

  • Subject to federal tax laws

Financing Instrument

Note or Mortgage:

  • Provided by a bank to the borrower via the YCIDA or GASP
  • Interest earned is exempt from federal and state taxes, which allows the bank to reduce its interest rate to the borrower

Bonds:

  • Issued by the YCIDA or GASP, which are backed by a letter of credit and tax-exempt to the bondholders
  • Due to issuance costs, bond transactions typically exceed $3,000,000

Interest Rate and Term

Note or Mortgage:

  • Determined by the bank

Bonds:

  • Determined by the pricing of the bonds, the letter of credit fee and other costs associated with the issuance of the bond

Job Creation and Retention

  • Create or retain one full-time job for every $50,000 borrowed

Fees

YCIDA Fees:

  • $2,000 non-refundable application fee, which is applied to the closing fee
  • Closing fee of .75% of the tax-exempt financing amount
  • Closing fee of .25% of the taxable financing amount
  • YCIDA legal fees
  • Annual audit fee, which is based on annual cost
  • Board action fee for board actions subsequent to closing the financing

GASP Fees:

  • $2,500 administrative fee
  • 20 – 50 Basis Points Issuance Fee based on the project size
  • GASP legal fees
  • All out-of-pockets costs
  • Board action fee for board actions subsequent to closing the financing