Tax-Exempt Bond Financing
The Economic Development Authority is empowered, under state law, to issue tax-exempt revenue bonds to assist in financing certain types of facilities, subject to requirements and limitations imposed under the Internal Revenue Code of 1986, Chapters 49 and 50 of Title 15.2 of the Code of Virginia, and Section 260.02 of the Codified Ordinances of Loudoun County. Projects eligible for tax-exempt financing through the EDA may include, but are not limited to, the following types of facilities owned by qualified 501(c)(3) organizations:
- Medical or research facilities;
- Facilities for the residence of low income or elderly persons (in certain circumstances, these may qualify even if owned by for-profit organizations);
- Facilities for the care of elderly persons;
- Private, non-profit institutions of collegiate, elementary or secondary education;
- Office or administrative space; or
- Parking facilities relating to any of the foregoing.
When issuing its tax-exempt bonds, the EDA serves solely as a conduit between the borrower and a third-party lender or underwriter. It is the borrower’s responsibility to secure a funding source (i.e., a purchaser for the bonds). Under state law, any bonds issued by the EDA do not constitute a debt or a pledge of the faith and credit of the EDA, Loudoun County or the Commonwealth of Virginia.
Prior to submitting an application for tax-exempt bond financing through the EDA, potential borrowers should (i) consult nationally recognized bond counsel to determine whether the proposed transaction is eligible for such financing under applicable federal, state and local law; (ii) if applicable, determine the remaining balance for Virginia’s allocation of private activity bonds; (iii) secure a funding source; and (iv) contact the EDA’s counsel for detailed application requirements and procedures. At a minimum, all applications for tax exempt bond financing must be accompanied by:
- An application fee in the amount of $2,500 (if the transaction is consummated, additional administrative fees will apply);
- Executed Agreement for Payment of Expenses; and
- Curriculum vitae or other materials identifying bond counsel (by firm and specific attorneys) and demonstrating counsel’s qualifications to serve as bond counsel for the particular transaction.
Links to the fee schedule and Agreement for Payment of Expenses are found on this page. Any questions regarding the application process should be directed to the counsel for the EDA.